Three emerging trends in property investment

What will 2019 hold for the property market? We look at some of the biggest trends we're likely to see in the year ahead.

Investors seeking regional areas over metropolitan

As property price growth continues to slow in Sydney and Melbourne, there is an increasing demand for regional properties by  investors thanks to more affordable housing opportunities.

According to CoreLogic’s Home Property Value Index for February 2019, the national median house price value slipped a further 0.9 per cent. In contrast, regional housing market values are up 2.4 per cent overall.

Despite the downturn in Australia’s two largest cities, there are still plenty of opportunities for investors who are prepared to focus on fundamentals and to purchase well at a time when there’s fewer buyers to compete with.

Regional areas are often overlooked and offer a mix of lifestyle appeal, affordable price points, access to amenities and transport options linking with major working precincts.

Units will outperform houses

Nationally, unit prices are  expected to do better than house prices in the coming years, with a forecast 2-3 per cent growth over the next two years, according to the February 2019 NAB Australian Housing Market Update.

While most capital cities, like Sydney and Melbourne, are anticipated to be inundated with unit developments in the coming years this could possibly drive prices further down. Also, new stamp duty concessions in Melbourne and Sydney may help to balance this out and boost unit property values.

However, unit prices proved more resilient than detached house values in 2018 with national median house prices falling 6 per cent in 2018, while units fell just 3 per cent and this trend looks set to continue in 2019.

Following the current trend, unit prices are predicted to be flat to positive across every capital city in 2019. Sydney, the weakest performing capital city in 2018, is set to see units buck the trend, forecasting the city will see the strongest unit price growth in Australia at 3 per cent. Nationally, unit prices are tipped to edge up by 2 per cent in 2019 before growing a further 3 per cent in 2020.

Great buying opportunities for investors looking at new properties

Amendments to legislation which came into effect on the 1st July 2017, restricting some tax depreciation deductions that can be claimed for older investment properties, factored into this particular trend.

Brand-new properties, which were unaffected by legislation changes passed to plant and equipment (division 40) depreciation in 2017, have resulted in property investors targeting new builds to optimise their cash flow and maximise tax deductions.

For these new properties, BMT Tax Depreciation found investors an average of $12,268 first year depreciation deductions in 2017/2018.

If you’re buying a new or second-hand property in 2019, it’s more important than ever to keep an eye on market trends and property news to stay up-to-date with the latest developments affecting the current Australian property market.

MyBMT, helps property investors make more informed decisions relating to their investment property. The new research and insights tab assists investors to learn more about the area in which a potential investment property is located. It also informs investors of any lodged planning applications and new developments in the area so there are no surprises after purchase that could decrease the property’s value.

For obligation-free advice on the deductions that are available for any investment property, contact the expert team at BMT on 1300 728 726.

Article provided by BMT Tax Depreciation.
Bradley Beer (B. Con. Mgt, AAIQS, MRICS, AVAA) is the Chief Executive Officer of BMT Tax Depreciation. 
Please contact 1300 728 726 or visit www.bmtqs.com.au for an Australia-wide service.

Date published 16 Apr 2019

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.