Navigating the pain: How property investors can tackle a challenging market

In the ever-evolving landscape of property investment, there is an undeniable truth that many investors are currently feeling the pain.

In a recent episode of Property Investing Insights with Right Property Group, Phil Tarrant along with Steve Waters and Victor Kumar discussed why certain segments of property investors have currently found themselves in uncertain territory.

“I think we need to be brutally honest,” the trio agreed. “Is there going to be pain in certain parts of the market for segments of people? Absolutely.”

The landscape of property investment has been in flux since the onset of the COVID-19 pandemic. Broader changes in the market have changed property investors’ bottom lines, as well as the market conditions that they’re operating in.

With some investors now selling their investment properties to protect their primary dwelling due to tightened financial situations, they’re looking at a very different selling situation than 12 months ago, or when they got into certain markets.

As Mr Waters explained:

“What happens when we get times of flux within economies is that people always want to protect the castle, which is their principal place of residence. So, everything else will go before that. What we’re seeing now is that in some areas, the majority of stock on market is investor stock. So, people are selling their investment properties.”

On top of that, holiday homes have also been quick to return to the market with the second homes that cashed-up Aussies invested in while weathering Australian lockdowns now having an impact on so-called “lifestyle markets”.

“You can see it in the data, that people are offloading the holiday homes that they’ve purchased during COVID and perhaps thought they’d retain that forever and ever and ever.

“And we can see that in the holiday-led areas that rents are falling. We can see stock on market increasing quickly, like quick, hard and fast. And that will continue to happen until there’s that balance between the household cash flow,” Mr Waters said.

Investors that didn’t have a thorough understanding of the basics of property investing, either because they were new to the game or lacked the education, are the ones potentially moving to sell now even though the conditions may not be right.

Those who have weathered challenges in the past, for example the market conditions created by the Global Financial Crisis (GFC), may be better prepared to sail through this challenge.

As the trio explained, out of the GFC, Australians have become more financially literate and proactive in managing their investments. This increased awareness has led to quicker decision-making and a greater emphasis on cash flow management.

The changing way the world accesses information has also had an impact.

“There’s no excuse not to be informed right now,” the trio agreed, noting that far from the days when you could only access property investing insight through seminars, there’s now a world of information at investors’ fingertips.

Ultimately, they shared that property investors who find themselves at a crossroads should seek out trusted advice. Property investment, if done correctly, can offer a soft landing even in challenging times and investors should be able to weather economic storms without significant losses. The pain experienced by these investors is more likely to be a temporary inconvenience than a long-term crisis.

To navigate the challenges of the market, successful property investors are taking a proactive approach, regularly consulting with their mortgage brokers and financial advisers as the financial landscape is continually evolving.

The trio stressed: staying informed about refinancing options and market trends can help investors make the most of available opportunities, ensuring their properties remain a viable avenue for wealth creation.

You can listen to the full episode here.

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