1 Million Reasons to Invest in Property Right Now!
Did you read our last blog about the impending property boom? If so, you would have read that we expected the federal government to take extraordinary action to counteract the current rental housing crisis being experienced in Australia.
No more than two weeks after that blog, the federal government revealed that they plan to unveil a plan to assist private investors in building 1 million new homes over the next decade.
Whilst the details aren’t exactly clear at this stage, Treasurer Jim Chalmers’ first budget will deliver an accord between the federal government, the states and private investors, including the superannuation sector.
When the budget is released, Chalmers will outline the government’s plans to bring together states and the investment community to increase the housing supply, focusing on new affordable homes.
This plan, upon its release, will pave the way for unprecedented investment from both the public and private sectors in the housing market.
Property Market to Get Huge Boost From Superannuation Funds
Interestingly, the government will be looking to increase the investment in the residential housing sector from Australian superannuation funds.
Currently, Australian superannuation funds have a balance of approximately $3.3 trillion, and it looks like the government will be looking to incentivise these funds to invest in the Australian residential housing sector.
Traditionally, large superannuation funds have invested in larger projects such as large apartment towers or commercial office buildings due to much higher returns.
The treasurer said, “we have the world’s third-largest pool of capital in our superannuation system, which is hungry for investments that will deliver stable returns over the long term for the benefit of members.”
This statement is a nod in the direction of how this plan will roll out.
The Areas Most Likely to Benefit
At this stage, there doesn’t seem to be a carrot dangled for the everyday mum and dad investor.
However, the level of investment the treasurer is talking about will, without a doubt, add a tremendous amount of competition to the market.
The treasurer also commented about the location of the 1 million homes his government wants to build.
“It’s more important than ever that we work together to ensure there is an adequate supply of affordable housing where it is needed – close to jobs, transport and other services.”
The importance of this sentence cannot be underestimated.
These homes will be built in similar areas to what Wealthology clients have previously purchased and in the areas, we focus on.
Wealthology’s methodology has always been based on strict criteria centred around infrastructure, employment, education, jobs, and affordability.
What Will $3.3 Trillion Do to the Market?
There is no doubt in my mind that injecting the capital being mentioned ($3.3 trillion) will have an immense impact on property prices in these areas and will bring an abrupt end to the softening of the market.
We can also expect the rate and severity of interest rate rises to taper off and even begin to drop towards the middle half of 2023.
It’s Time to Invest Before Everyone Else
As an investor, I see no better time to start reviewing your options to build your property portfolio.
As prices have softened, investors can now take advantage of slightly discounted prices. In addition, rents are rising at record levels – only last month rising by an incredible 4.3% nationally, resulting in better-than-ever gross rental yields.
Once the government’s plan is rolled out in its entirety, expect competition in the marketplace to increase quickly and significantly, putting upwards pressure on prices once again. It will be fierce.
If you’re looking to take advantage of this, you must reach out and beat the masses, as next year, you’ll be in the queue again, fighting with other investors just for the chance to secure a property.
Contact me directly at leonie@wealthology.com.au
