Capital gains are something any property investor will no doubt be familiar with. They give an insight into how much the value of a property appreciates over time, helping to inform your decision on where to make that all-important purchase.
The January CoreLogic RP Data Home Value Index is a good place to start for anyone thinking of investing in 2015. It reflects on how well property performed across the nation’s capitals not only during the first month of the year, but also over the past 12 months.
Melbourne and Sydney seem the most likely choices for anyone with property investment loans. In January alone, Melbourne’s home values were up 2.7 per cent, while Sydney’s marked a rise of 1.4 per cent. There’s also the option of Hobart, which experienced an increase of 1.6 per cent.
However, it’s important to look at more long term data, as CoreLogic RP Data Head of Research Tim Lawless explained that Hobart doesn’t usually perform this well. In fact, it has witnessed the lowest rate of capital gain since the global financial crisis took hold.
Sydney, on the other hand, has witnessed the highest capital gains over the past year. Values are now 13 per cent higher than 12 months ago, and Sydney has also witnessed the highest aggregated capital growth of any city since the financial crisis.
Mr Lawless anticipates that the investor market could improve further over the coming months, providing of course that economic conditions are just right to encourage people into the market.
“Lower interest rates could potentially add further fuel to the housing market, particularly the investor segment, which continues to remain strong based on recent data,” he noted.
Investors currently have the added benefit of the 2.25 per cent cash rate, which was implemented by the Reserve Bank of Australia on February 4. This will bring down the cost of borrowing further, perhaps even enticing more people to consider buying investment property.
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