Today’s Courier Mail reported that “A rise in the number of investment properties whose rental returns exceed the cost of the mortgage will trigger a recovery in the housing market”.

I agree with this sentiment but would like to add to it. Many developers are now either unwilling or unable to obtain construction funding. This is causing a diminishing of supply of new property… either in the planning phase or currently under construction. On the demand side of the equation, we have a growing population, record migration levels and a very generous first home owners grant. These factors, along with the new era of falling interest rates, are all placing additional demand pressures on what limited and dwindling supply of new property is coming onto the market. This good news for property owners should not be underestimated; it will help bring on the next up-cycle!

The global economic crisis has caused some young people to move back with mum & dad and others to share accommodation. The net effect of all this has been a temporary softening in rental demand and thus… rental values. Even so, the recent dramatic reductions to interest rates means investors are so much ‘better off’ than was the case just 6 months ago; even if we factor in a 5% softening of rental income.

There are many thousands of Australians looking to start investing again… they are just waiting to see what “everyone else” is going to do first. Look out! Because when the tide turns it will turn quickly… and property prices will follow accordingly.

Happy Investing,

Nick Lockhart
mrd Customer Care Program… because investing is personal