Are we in a property crash or a credit crunch?
From what we hear in the media it’s a property crash. In
order to whip up a frenzy they’re making bold statements like “The market is in
free fall and may not stop”, “Property prices will continue to drop. “
If you look back on the media releases between 2010-2012 you
would have seen similar fear inducing headlines as you can see from one example
below:
· “Right now is not the right time to be buying
real estate in Australia.”
· “Our love affair with property will be tested
amid predictions prices will drop 60%. “
· “Dr Stephen Keen, Professor of Economics and
Finance at the University of Western Sydney stated house prices where overvalued
50%.”
Read
full news article by Sonja Koremans, NewComAU, January 20th, 2012
Despite what the media is telling us, the consensus amongst
the experts is that we are in the midst of a credit crunch, not a property
crash.
If you look at the Sydney and Melbourne property markets,
you would have witnessed phenomenal growth our the past 6 years with Sydney
increasing in value by up to 85% and Melbourne 65%. Other markets have been
stable and others have decreased in value. In the property industry, we call
this a ‘CORRECTION’.
This correction in the market isn’t based on high interest
rates, or high unemployment. It’s based on credit or the ability to borrow
money to fund the purchase of your investment property/s.
Every Australian that is looking to borrow funds to build
security for their future to retire comfortably on, or to invest now and
hopefully build equity to buy their own home one day, has been affected by this
restriction in credit availability.
There are four main players at work, click here
to read more about who they are and what they’ve done. The
bottom line is that they’ve made it harder for investors to borrow money. Hard
but not impossible.
What this means for astute investors is that there are
opportunities.
Finance
A good mortgage broker who specialises in investment lending
will help you navigate your way through the changes. They know what the lenders
are looking for, so they can work with you to ensure you meet their criteria
and secure lending at a good rate. We have some great brokers that we work
with, so please get in touch if you need a referral.
Properties
We always tell our clients that investing in property is a
long term wealth creation strategy. Buying now, when prices are lower and
there’s less competition, means that you can buy well as long as you do the
research before you invest. Now, more than ever, research is key. You need to
know that the location is forecast for capital growth and that there is strong
rental demand.
We can help you with all of this. Every property that we
recommend has been through our stringent selection process and must meet our
criteria before we even run the numbers on it. Once the numbers are looking
good, we then present them to our clients.
Don’t let the fear mongering affect your plans to build
wealth through property investing.
Your success depends on three main factors – buying,
borrowing and managing. Our aim is to ensure that you do all three well.
Peter Gordon
Director
Investo Property
Please contact the Investo Team to
discuss how we can help you cut through the hype to get to the facts.
