Strong consumer demand, the ongoing situation in Ukraine, the knock-on impacts of the COVID-19 Pandemic, and a range of other issues around the world have led to record levels of inflation in Australia. Unfortunately, the economic recovery after COVID has had more of an impact than what was previously expected and this is making life difficult for everyday Australians and local businesses. Many Australians are experiencing higher costs at every corner as business owners face a higher cost of doing business which they simply cannot absorb any more and have to pass on to consumers. It’s a difficult time but with the help of a local financial planner service, many Australians are finding ways to navigate these tricky times. 

The property world has in no way escaped the impacts of inflation, making this a difficult time for investors. The key thing as a property investor right now is to arm yourself with as much information as you possibly can. Not only should you be clued into what is going on in the world and in your local area but listening to economy podcasts, reading articles online, and tapping into your local network to find out what is going on locally are key in helping you to understand the current landscape. With a clearer picture of what is going on you will be in a better position to manage the impact of inflation on your bottom line potential. 

Continue reading to learn more about the impact of inflation in the property investment world and what you can do to manage it as best as possible. 

What Is Inflation? 

Before getting into things, it’s important to have a clear understanding of what exactly inflation is. Inflation is essentially the steady increase of prices in the economy over a period of time. For example, a litre of diesel might have been $1.50 at one point but over time, it has crept up a cent here and there and now it might be $2 for that same litre. Inflation can be caused by a wide variety of different issues locally and globally, however, the three main factors you need to consider are fiscal policy, production costs, and demand. 

In the property investment world, the concept of inflation remains the same. A property that might have been sold for $1.2 million might sell for $1.5 million today. What this means for investors is property prices and interest rates soaring. Moving forward, properties will become more expensive as the interest rates continue to increase.

Good News For Anyone Selling

While inflation typically results in savvy property investors sitting tight on making any major investments, effectively halting the growth of their portfolio, it’s a great time for anyone selling. Finding a buyer is more difficult but if you have a particularly attractive or in-demand property that you were planning to sell soon, now is the ideal time to put it up for sale. The impact of inflation means that, naturally, you will get a significantly higher price for your property than you might have had in the past. 

As mentioned already, it can be more difficult to find a buyer when the economy is in its current state. However, if your property is sought after, you could stand to benefit hugely. If things progress to a bidding war, you stand to gain, as the already high asking price will grow as the bidding battle continues. 

Managing The Investment Landscape 

Economic times like these bring a lot of uncertainty for property investors. If you are looking to buy, make sure that you are realistic about what you can get for your money compared to before. Take the current interest rate into account and consider how it could impact any possible loan or mortgage repayment moving forward. However, unless a highly desirable property comes up for sale, most property investors will be sitting tight right now while they wait for things to level up. Often after a period of high inflation, people need to sell their property quickly to recover from the downturn, which means there can be some great deals to be had. Be patient and avoid jumping the gun when it comes to buying during the recession. On the other hand, if you are selling a property, there really is no better time to put your property on the market if you want a chance at getting the best price possible. 

Take Control Of Your Investment Portfolio Moving Forward