10 Ways Property Investing Has Changed Since The 1990s

If you still think property investment means pulling a house off the shelf and popping a tenant in, it’s time to think again.

Rising prices, lower interest rates and a population boom have transformed Australia’s property investment landscape over the last 20 years.

Canny investors who understand the complex demands of the current market, along with future growth trends, are primed to take advantage of the extraordinary range of property investment choices now available.

It’s simply a question of knowing what’s hot and what’s not – how times have changed, and what this means for smart property investors keen to build, or continue building a portfolio.

1. Increasing prices

Property prices have grown exponentially since the early 1990s, when Australia was struggling through a grim recession.

The stock market bubble had burst in 1987, with an associated surge and fall in house prices.

From their trough in 1996, property prices gathered speed to reach a peak in 2010 – increasing by 123%, the largest boom on Australian record, as reported by The Australian Business Review.

Despite a tail-off in some capital cities, property prices remain buoyant on the east coast.

But the affordability factor is not an issue for investors choosing cashflow positive properties in areas of high population growth and rental demand.

2. Steadily reducing interest rates

As prices have spiked, so interest rates have been on a downward trajectory over the last 20 years.

With interest rates in 2017 at an all-time low, there’s never been a better time to invest in property.

As reported by Trading Economics, the Reserve Bank of Australia left the cash rate unchanged at a record low of 1.5% following the 7 February meeting this year.

The Australian cash rate has averaged 4.78% between 1990 and 2017, after reaching an all-time high of 17.5% in January 1990 and the current 1.5% in August 2016.

So, property investors today are operating in a far more conducive environment for investing than the 1990s.

3. Home ownership down, rentals up

Back in the 1980s and 1990s, when home ownership levels were still high, investors worried about finding tenants for their property.

A steady reduction in home ownership and corresponding increase in renting has, however, solved that problem for today’s property investors.

Australian Bureau of Statistics figures demonstrate that home ownership in Australia has reduced from 71% in 1994-95 to 67% in 2011-2012.

This is in line with global trends, reflecting social and demographic changes along with Millennials’ preference for adaptable housing which suits their mobile lifestyles.

MORE: Young Australians Follow Global Shift To Renting

4. Expanding population

The Australian population is roaring ahead. From a total of 10.4 million people in 1960, Australia recorded a population of 24.1 million on 30 June 2016, according to Trading Economics.

In 1990, Australia’s population was sitting on just 17.1 million, as noted by the Australian Bureau of Statistics.

With births outstripping deaths and a net gain of one international migrant every two minutes and 25 seconds, as Australia’s population clock shows, the opportunities are ripe for astute investors.

MORE: Two-state population boom positive for property investors

5. City apartment glut

Inner city apartments in several of Australia’s biggest cities are experiencing an over-supply which is forcing prices down, as reported by news.com.au in January 2017.

Fuelled by a tightening of bank regulations in 2016, causing a dramatic reduction in the number of Chinese buyers in the higher end apartment market, the number of apartments being released in Melbourne, Sydney, Brisbane and the Gold Coast is exceeding demand.

Many investors still equate inner city apartments with sound property investing, being unaware of shifting trends over the last 20 years.

6. Rise of regional areas

With new, more affordable suburbs and ‘satellite cities’ springing up around traditional centres of employment, the game has changed for property investors keen to spend their money wisely.

Australia’s steadily climbing population is great news for property investors who buy into growth corridors around Australia’s big cities, as well as booming regional areas which attract migrant workers and young families following job opportunities.

You just have to know where to look!

7. Infrastructure boom

An explosion of infrastructure serves these expanding areas, made up of new roads, freeways and rail links.

As well as providing employment, these projects boost house prices in surrounding areas and increase demand from tenants looking for housing which offers convenience and accessibility.

Docklands growth, outer suburban development clusters and significant regional expansion has altered the face of Australian property over the last 20 years, with new transport networks connecting them with the cities.

8. Vast choice of property styles

Remember back in the 1990s, when you simply selected a house, apartment or unit as your investment property?

The choice of investment properties available today is staggering, with a huge growth in cashflow positive options which help you pay down your mortgage with enough over to invest in another property.

Dual Income Properties are no longer simply granny flats or units stuck out in the grounds.

They are flexible, contemporary, positively geared duplexes and townhouses spacious enough to house families and stylish enough to attract a wide range of tenants.

MORE: 8 Compelling Reasons to Invest in Dual Income Property

9. Interstate options

Property investors are increasingly looking interstate for the most profitable opportunities.

This is in stark contrast to the nineties, when investors tended to play it safe and stick to property choices in known suburbs and high-demand inner city areas.

Negative gearing was the thing back then, as would-be property investors searched for the worst property in the best street.

As commodity prices rose and the mining boom took hold in the early 2000s, numerous property investors gained and lost large amounts of money through risky, positively geared properties in remote mining towns.

A property investment specialist can advise you on a wealth of solid interstate options around major cities, now offering positive cashflow, high tenant demand and longer term capital growth.

10. The rise of Airbnb

Those interested in capturing the tourist market no longer have to rely on advertising for holiday tenants via traditional channels.

The growth of Airbnb, the online accommodation phenomenon, is allowing investors to sublet their inner city or seaside homes via a global platform.

As reported in Australian Property Investor in July 2016, Airbnb already has more than 70,000 Australian property listings.

Airbnb offers huge potential for investors seeking flexible, alternative rental arrangements which don’t tie their property to a long-term lease.

However, it can be hard to turn a profit on a negatively geared property. And without a property manager and comprehensive landlord insurance policy, some property investors remain exposed.

Australian property investment has substantially changed, opening up new possibilities for investors.

Talk to us about starting or expanding your property portfolio today.