4 reasons why people are buying investment property in 2017

Should I invest in Australian property in 2017? There is no one-size-fits-all answer to this question, but it's undeniable that the country's real estate market continues to attract people looking to expand their portfolio.

Experts have been predicting that the investment property bubble will burst for some time, so why buy now? Let's take a closer look at the reasons for purchasing an investment property in 2017.

1. Real estate prices continue to rise

Property values are increasing and they show no signs of abating. The most recent Real Estate Institute of Australia figures showed median capital city house prices jumped 4.1 per cent in the December 2016 quarter, while other dwellings enjoyed a 2.1 per cent increase.

More recent figures from the CoreLogic Hedonic Home Value Index found that dwelling values across the country's capitals climbed 11.7 per cent year on year in February. Sydney and Melbourne real estate saw the lion's share of the gains, increasing 18.4 and 13.1 per cent respectively.

2. Interest rates at record lows

In March, the Reserve Bank of Australia confirmed that the key cash rate would remain at the record low of 1.5 per cent for another month. As such, property investors are attracted to interest-only mortgages and gearing opportunities when interest rates are low.

Savvy landlords who can rent out their investment property to the right tenants can cover the majority of their costs while mortgage repayments are low. A comprehensive landlord insurance policy can also cover investment property owners against potential problems.

3. Investor lending increasing

The latest housing finance figures from the Australian Bureau of Statistics show the investment property bubble hasn't burst yet, as a growing number of people continue to secure lending for home purchases.

Finance commitments to buy investment properties jumped 4.2 per cent in January 2017, when compared with the previous month, rising to $13.8 billion.

Low interest rates are just one of the reasons why people are buying Australian investment properties in 2017.

4. Market still open to young investors

Media reports regularly suggest that young people are locked out of the investment property market due to rising values.

However, a recent realestate.com.au survey found that between 25 and 34 is the most common age to purchase an investment property in Australia, with 33 per cent doing so before owning their own home. This trend is known as 'rentvesting', whereby people purchase a property within their budget, but rent in a more desirable (and usually more expensive) location.

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