NO Property Slump for Investors with The Right Product
I get asked this question many times, ‘Are We in A Property Slump?’, not one person has the answer, to where the property market is headed before it turns. So much speculation out there giving property buyers headaches giving some with less experience making a decision to hold off and adopt a wait and see approach. No one can come up with an immediate answer as to where and when it will be when it begins to take off again, but if one looks at history, it provides us all with the answer and that is up.
The value of investor lending in key states where the property graph indicates a downward line is simply because of the fact that investor lending is down. It was never about supply versus demand which pushed houses prices, I believe it was about the availability of cheap credit and the accelerated rise in people willing to take on big debts above there comfort level. It’s now not about the consumer not wanting to buy, it’s all about how they settle on the property when it is time to do so. In saying this many continue to buy, I have been advised that they are seeking development property with a realistic price point where they rely on banks lending them 60% to 70% rather than 80%, putting them in a comfortable position within themselves when it is time to settle. Purchasers then carry out an independent valuation in approx. 12 months down the track once they have obtained all necessary permits for construction. Permits are valid for 2-3 years with the option to extend its validity date, many want to proceed to undertake the development, though may adopt then the wait and see approach as to when they opt to start construction – their key objective now is obtaining such properties as they come available, as it is a buyers’ market, as negotiations for a long settlement looks favourable avoiding any holding costs. This period from when the contract is signed to date of settlement is used wisely to begin the permit process.
In 2014, Australian Prudential Regulation Authority (APRA) introduced a 10% annual cap on housing credit growth to investors, and in 2017 a 30% limit on interest-only lending as a proportion on new homes loans. Since such introductions, the property price graph line showed a decline in prices, though when the Reserve Bank cut the cash rate from 2% to 1.5% the decline line started charging direction in an upward trend. APRA has since retracted its restrictions, though with talk about possible changes to the tax treatment on investment properties should labour come into force and be alerted, such property price line has changed its direction. It is speculated that if labour is elected and tax laws on investment properties come into play, that this may only affect those that intend to buy an investment property from a certain date after the legislation is introduced and not the investor which has already purchased, if this is the case, then I can only see a rush into purchasing properties which will only push the line in an upward trend.
Everyone has a trigger point, once that confidence is found within oneself, they go out and purchase, those that tend to hold off will inevitably pay more for properties and those that go in early will be judged by others – hindsight with 20/20 vision, they will then comment on how lucky they have been – its about creating your own luck.
Wish to know more and how we can accommodate you, please do to contact us 0n 1300 767 893 for a free consultation, at a time of your convenience. We assist you in locating development sites to accommodate your budget, and in locations where most people don’t see the potential in growth, and then follow through and assist you in the planning process providing you with a Guarantee on Planning Permits.