Property investors capitalise on capitals

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It’s been a big year for not just price rises, but also auction volumes.

Auction volumes have risen 14% on 2013, according to research house RP Data. Sydney and Melbourne are driving increased volume levels nationally, and creating investment opportunities for buyers in capital cities.

Weekly clearance rate, combined capital cities

The preliminary auction clearance rate across capital cities was 69% this week, which is more robust than the 63.5% last week and the 67.4% recorded for the same time last year.

This week Sydney recorded a clearance rate of 75.2% and its second highest volume of auctions in 2014. That rate compared with 68.1% last week and 75.3% last year.

Melbourne’s clearance rate was 66.7%, compared to 65.5% last week and 69% at the same time last year.

RP Data’s housing market specialist, Robert Larocca, says Melbourne has had lower clearance rates over the last few weeks but analysis shows rates are returning to trend following a solid start to Spring.

Capital city auction statistics (preliminary)

What should smart investors do?

Property expert Margaret Lomas says investors should ignore the media hype around “property bubbles” and get back to basics when making investment decisions.

The first thing to consider is what kind of property investor you are.

“The first class is the property speculator. Such an investor will buy for short-term profits, timing the market on the way in and on the way out, to ensure that the profits they do make create a sufficient return to cover buying costs, and the capital gains tax which will become payable” Lomas told Switzer Super Report’s sister website Switzer Home Loans.

“The second class is the buy-to-hold property investor. The aim of such an investor is to acquire a property and then build on the growing equity in order to create a base of assets that will later provide a retirement income.”

If you’re in it for the long haul, Lomas suggests avoiding risks and keeping your eyes on key growth drivers. That way, you’re less likely to jump into a boiling pot when you should be investing in slow cooker suburbs.

Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regards to your circumstances.

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