Positive gearing along with capital growth opportunities see investors return

Written by realestateview.com.au in Investment on November 25, 2020

Mr Wargent said ‘in the not too distant past, borrowers were rushing to lock in interest rates because they feared paying double digit mortgage rates, but now there’s been a shift to fixed rates because deals have become so cheap, even for investors looking for interest-only loans.’

‘There are plenty of mortgage products available from under 2% now, while an investor seeking an interest-only loan might be able to secure finance from 2-3% this year.

“And we’re seeing more and more enquiries from investors now as confidence increases that the economy will rebound in 2021 and dwelling prices will increase sharply,’ Mr Wargent said. “We’re seeing more and more enquiries from investors now as confidence increases that the economy will rebound in 2021”

Doron Peleg, CEO of RiskWise Property Research, said that lower mortgage rates have brought about a dynamic that investors haven’t seen for many years, being the potential for positively geared property investments, even for houses in the capital cities.

Yields on residential property, particularly being a stable asset class with capital growth potential, have tended to be relatively low, especially in the most mature capital cities of Sydney and Melbourne’.

‘That said, it’s not difficult to find capital city houses generating a rental yield in the range of 4% to 5%, and this is certainly the case in Brisbane, Perth, and Adelaide where we expect to see investor activity rising in 2021,’ Mr Peleg said.

This is simply an excellent opportunity window and a rare situation where houses deliver both strong capital growth projections and positive gearing.