Investing in property is an ancient way to build wealth. People have been doing it for hundreds of years, looking for ways to secure returns and increase their net worth.
But is 2022 the time to invest in property? You’re about to find out. In this post, we take a look at the current state of the market and what it means to people like us. Just because the market is hot, it doesn’t mean that there aren’t affordable properties out there, just waiting for someone to snap them up.
Passive Real Estate Investment
You don’t necessarily have to go out and start buying properties to get into real estate. Passive strategies are now on the rise.
For instance, people looking to get started in real estate are buying real estate investment trusts (REITs) to bypass some of the high transaction fees associated with conventional real estate purchases. They’re investing what they can into shared ownership of baskets of real estate, instead of having to buy properties outright. This way, they can earn yield from real estate without the need to stump up enormous amounts of capital.
Overseas Investment
Just because the domestic real estate market is hot, there are still opportunities to buy low in other countries. Flats for sale elsewhere may be available at a discount from the market rate back home. Remember, the real estate market fluctuates dramatically from location to location, even within a country. You can often find bargains at one locale that would be impossible to find in another.
More Affordable Homes
Thanks to today’s inflation environment, people are looking to rent more affordable homes. Therefore, landlords who own cheaper properties are likely to see more demand. Competition for low rents will probably push up the bottom end of the market, increasing returns.
Investing in this type of property, therefore, is one consideration. Furthermore, even if interest rates do rise for the rest of the year, mortgage repayments will be less of a concern. You’ll be paying back a smaller amount on a single property, and higher rents will likely cover the extra cost.
Selling In The Domestic Market
Property owners are taking the opportunity to sell now while the market remains high and holds onto their capital. While stocks are taking a beating due to fears of higher interest rates, the property sector continues its upward march, mainly because it lags behind the rest of the economy.
Sophisticated property owners expect conditions to change quickly. They believe that the market will cool throughout the rest of the year which is why they are looking to sell now to get ahead of the rush.
Selling now will help you beat higher interest rates in the future if you already own property. You may want to sell in the domestic market and then use the cash to buy a new home in a foreign market. This way, you can sell at the peak back home and then buy in the foreign before the rush begins.
