Despite the pessimism that existed throughout the pandemic, the real estate investment market is expected to revive in 2022, if the data is believed to be accurate.
Loan obligations on total housing rose by 2.6 percent in January 2022, reaching $33.7 billion, an 18.2 percent increase over the previous year. Adjusted for seasonality, the number of new loan commitments for all types of homes increased.
The total amount borrowed increased by 6.1%, reaching a new record high of $11 billion. Investor homes saw a rise in demand. So Is 2022 the time to invest in a Rental Property read below.
Following the fact that a large number of people will be renters within a few years, here are four additional reasons why now is an excellent time to invest in real estate.
Real estate prices have risen in recent years.
In 2021, home prices rose by 25.5 percent, 14.9 percent, and 29.2 percent in the respective manner of different regions. Real estate investments will only continue to rise in value as a result of these data. As a result, it reveals the fact that the housing market is an exception to global norms. Due to the fact that it is outpacing even the share market’s expansion.
Re-opening of formerly closed borders between countries
Due to the reopening of international borders, more tourists from other nations will be entering, increasing demand for rental homes. This will benefit real estate investors.
The cost of renting a home has risen at the same time, with increases ranging from 11.3% in Brisbane to 4.6% in Melbourne.
Return on Investment (ROI)
Even while most individuals would like to invest in the stock market, the return on an investment property can occasionally be much higher. Dow Jones averaged an annual return of 4.8 percent during the past decade. However, the average gross yield for rental investors in 2020 was 7.7%, and this number may be much higher depending on the area.
Currently, the stock market has a high degree of volatility, which some investors find unappealing. Despite this, the real estate industry is thriving. Another advantage it has over stock is that it is a tangible asset. As a result, a well-chosen rental property may be better than extending your stock portfolio in terms of return on investment and risk mitigation.
Ability to Amass Assets
Consider purchasing your first rental property rather than your first home. For as long as you want someone else to assist you to pay your mortgage, you’ll be able to start building equity in your home. You may be able to make money renting out your home for more than the monthly mortgage payment. You can use this extra money to pay off debt, pay your bills, or save for a down payment on your next house.
Definition of Inflation Insurance
Overall, the economy has been experiencing inflation and a decrease in purchasing power for dollars. The stock market may take a hit from these changes, but the real estate market remains strong in the face of inflation. Property owners can benefit from inflation in several circumstances. Inflation tends to raise both the price of renting and the value of the real estate. Increasing inflation means that you can boost your investment property’s rental rate to reflect this. If you have a fixed-rate mortgage, your monthly payments toward the principal and interest will remain the same. Without a significant increase in the amount of money invested in the property, this could result in a higher profit margin
There has been an increase in the demand for holiday rentals.
This exceptional demand for holiday lodging has resulted in excessive prices as owners seek to recover the cash they lost during lockdowns.
Even while demand has shifted away from major capital cities and toward smaller towns and rural areas, prices have risen by more than 80% since the end of last year. Although demand has been concentrated more in regional areas, this is the case.
Short-term rental booking data shows that renters are increasing the size of their accommodations for health and safety reasons. High demand for vacation rental properties is also helping to reinforce the sector as a viable option in the years ahead.
An interest rate that is relatively low.
Investing in real estate in 2022 has never been more affordable for investors due to the fact that out-of-pocket expenses (also known as “net outlay”) have never been lower. Investment in real estate in 2022 has never been more enticing.
With interest rates currently at a historic low of 0.10 percent, there’s never been a better opportunity to expand your property investment portfolio or get your first foot in the door of the property market. This is because interest rates are at their lowest point in history.