Is now the time to buy an investment property?

There has been much discussion and commentary over the past 24 months about Chinese investors pushing up or inflating property prices, particularly in Melbourne and Sydney.

Chinese investors have invested more than $40 billion in 2012 and 2013 according to purchases tracked through the Foreign Investment Review Board (FIRB).

But is the tide starting to turn on Chinese investors? At the end of 2012 the Australian dollar was $US1.04. The Australian dollar has since declined by 30%. This means that the Chinese investment in property and resources in Australia has also declined by 30% as the Chinese yuan is pegged to the US dollar.

Another sector where Chinese investors have been prevalent has been the Australian Resources Industries. The Resources Sector Stock Market index has declined by over 16% in the last financial year.
With the decline in the Australian dollar, the recent weakness in the Chinese Stock Market and Melbourne and Sydney property prices at record highs will Chinese investors continue to invest in the major property markets in Australia? If the supply of property increases and the demand tapers off then that can only lead to property prices declining or stagnating at best. Now is the time to be cautious about investing in real estate particularly for properties where the rental return is low.

Should you require any information about buying an investment property please contact Peter Quinn by submitting an online enquiry or calling us on +61 2 9580 9166 to book an obligation free appointment.

The information in this document does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness having regard to these factors before acting on it. It is important that your personal circumstances are taken into account before making any financial decision and it is recommended that you seek assistance from your financial adviser.