Trying to pick property market movements in recent years has been tricky to say the least, but a recent lending report from Westpac bank into home loan approvals gives us an indication of what lies ahead in 2013.
The report shows that while lending for homes remained stagnant in October, the number of loans for investors continued to climb. Loan approvals to investors rose 5.5%, and this was off the back of a massive 8.8% jump for September. Year-to-date loans for investors have risen by 21%.
The planets are aligning for investors as the numbers begin to stack up. It is now becoming very affordable for investors to seriously consider a property purchase. But as the investors return to the market, the savvy ones will be looking to purchase properties that not only have minimal holding costs but also significant capital growth potential.
Investors will no doubt hit the traditional investment areas such as South Yarra, Elwood and Richmond. As usual, they will look for the standard requirement of good transport infrastructure, shopping, restaurants and bars because all theses things result in strong tenant demand.
However, investors should also be looking for emerging markets where properties are more likely to benefit from a big upswing in capital growth.
Take, for example, a couple of recent property sales in Melbourne’s inner west and north.
A one-bedroom apartment at 8/60 Farnham Street, Flemington, sold recently for $335,000. This price is more than $100,000 less than the median price of apartments in Melbourne so represents very affordable buying. In addition to the low entry point this property has the potential to be let for around $300 per week.