property investment
Investment Property Trends for 2020
Posted on January 7, 2020 by Mirren Property InvestmentThe boom that the Australian property market witnessed in mid-2019 is predicted to be sustained through 2020. The avenues for the property market look bright for this year.
We’ve seen a modest increase of sales in the housing market in 2019 in different categories including geography and price ranges. How about in 2020? In this article, you’ll find some of the latest research about the real estate market, including the reason for the rise in home prices, decrease in mortgage rates, and the changes in the home buying process.
Find out the latest property trends for the year 2020 and how it might affect you as a home buyer. Here’s what you need to consider while buying an Investment Property?
2020 Rise in Home Sales
Home sales will have a better and more positive outlook in 2020 according to an article from CNBC. People will find the confidence to start buying homes again as mortgage rates drop. Mortgage interest rates have been at its lowest, today it stands to 4%, 3% – compare that to the 14% back in the 1980s!
Mortgages will remain low for the year 2020 and thanks to these low rates, refinancing will remain a popular choice. Low rates also mean that more people can afford houses than they otherwise would. There will be fewer renters and more home buyers.
Due to the fact that houses average around 30% below their peak in many major cities, it’s probably less expensive to buy than rent. This is already shown in numbers as just this year the expected home sales will increase by 6 million and will climb to 6.1 million during the start of 2020. Homebuilders also reported that their sales went up from thirty to forty percent. Want to know some fundamentals of investment properties and diversifying your investment properties portfolio?
If you’re going to sell your house in 2020, you wouldn’t have a problem as the demand will be high. However, due to the high cost of homes, buyers will also be a lot pickier. They won’t just buy any home, they will look for more affordable ones with the best amenities that money can buy.
Since the cost of renting is going up, buying homes is probably a better and more suitable option. However, buying a home is almost next to impossible with the outrageous prices, borrowing costs, and fees today. The next step would be to ask help from property mentors to find options and homes that would better fit our incomes.
Introducing the Millennial Homebuyers
Currently holding the largest share of the home buying market, the Millennials are bound to come in a much bigger and larger force in 2020. Unlike the previous generation who relied on realtors and personal referrals, millennials are buying homes much more differently.
Millennials who have grown up with technology will prefer searching for homes through mobile apps and websites, and soon enough this will find its way into the standard home buying process. In fact, according to the National Association of Realtors, 81% of older Millennials were able to find their homes through a mobile app. This just shows how important technology is becoming in the real estate world and investors who fail to transition might be left behind.
A recent survey from Redfin found that 45% of millennial homebuyers bought a home before they even visited the site in 2017. Despite the rumours that Millennials aren’t buying homes, the National Research Association found that consumers aged 36 and younger are currently the largest groups of homebuyers.
Smaller Homes with Better Amenities
Forget about McMansions, millennials are seeking slightly smaller apartments and investment properties in 2020 that suits their lifestyle. Whether they have pets or want an organic garden, they want homes that they’re able to live in.
This 2020, we’ll see more property owners and builders capitalize on amenities in order to attract tenants and good home buyers. Properties won’t just come in the staple gym and parking access, now we’ll see better and more unique amenities such as smart homes, co-working spaces, and communal gardens, among many others.
Millennials are captivated by technology and sustainability such that they’ll prioritize smart homes, appliances, and energy-efficient designs. Growing up and learning how impactful global warming is to our world, millennials are more concerned about the environment more than any other generation.
Sellers who can’t offer these amenities this will either have to lower their price or run the risk of losing their millennial customers. Young millennial couples who are pushing into their late 20’s will want homes in order to start building their families. The high home prices and lack of sustainable and affordable starter homes have kept some of these entry-level home buyers out of the market.
Millennials and their unique way of living are transforming the real estate market. However, housing affordability remains a major concern for millennials. The state is slowly starting to address this problem, but there’s still a long way to go. This group will drive the housing market more than any group and their decisions and buying patterns will most likely affect the real estate market.
Technology in the Home Buying Process
The potential use of artificial intelligence is likely to happen in real estate. This will change a lot in the home buying process starts with organization, management, and design. Everything will be automated, modern, and urban.
We’ve already seen sites where we can view online listing and find our potential realtors. However, this technology is still in its early state. Today, a lot of people are suggesting the possibility of creating a streamlined, personalized, and more efficient platform for buyers and sellers.
One of the most important things that buying property online lacks is the option to physically “tour” the home. However, this is now possible with virtual reality technology and 360 photography. These new technologies allow you to get an all-around view of a house in great detail without having to visit the physical location yourself.
Many companies are now doing this to improve the customer experience. Many inaccurate and poor photos taken by estate agents have discouraged customers to buy properties, and with VR, it will literally feel like they’re touring their potential house in person.
Increase in Sales for Houses in Suburban Towns
The ever-increasing cost of a home in the cities will prompt people to buy more houses in the suburbs, often just on the outskirts of major cities. Younger people who are starting families will find that it’s easier and financially wiser to settle in the suburbs.
This also makes it possible for investors to buy investment properties in 2020 or set up shops in second-tier cities in order to save more money from buying from first-tier ones. Investments will increase not just in one location but also to these second-tier cities. It will also result in better economic growth for people in these areas.
Life in the big city won’t look as glamorous in 2020. People will flock to the suburbs in search of better homes that won’t burn their wallets. This will also lead to infrastructure developments in the suburbs.
Contrary to the popular belief that millennials prefer cities over suburbs, recent studies found that only a small portion feels that way as more and more favour the suburbs over urban settings. Although walkable communities that enable you to drive less can look appealing for them since most millennials will rather pay for condos rather than cars.
A large percentage also feels that they can’t afford their first home in the city and would rather settle down and find a simple starter home in the suburbs. According to a recent study, three-quarters of millennials want a single-family home. This just proves that how they live is more important than the location or characteristic of the home they want.
Final Thoughts
It may be hard to know the exact direction of the real estate market in the coming years, however, the data shows clear that millennials will be the next dominant force in housing for the next decade. Just like how baby boomers changed housing and led to the growth of suburbs, millennials are paving the way to new real estate trends.
Planning to expand your investment properties portfolio in 2020? Book a complimentary obligation-free strategy session with us here: https://www.mirren.com.au/contact/. Now is the time to plan your investment strategy.
References:
https://www.savings.com.au/home-loans/property-market-will-continue-to-strengthen-in-2020-nab/
https://www.newhomesource.com/guide/articles/what-millennials-want-in-a-new-home
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