Property Crash or Credit Crunch?
- By Peter Gordon
- •
- 18 Apr, 2019
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.
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.
| Quiet simply, the Palms is the place to buy! |
Sydneysiders and Melburnians, put aside your equally outstanding flat whites for a moment. Stop bickering about whether great beaches beat cool laneways (they do) and desist from debating whether all baristas require waxed moustaches (ideally).
Because Brisbane is closing in on the title of Australia’s best city, and we must join forces to keep this subtropical upstart in its place.
Time magazine recently named Brisvegas on its “World’s Greatest Places” list, and omitted our cities. It’s a huge shock (and who knew they still published Time magazine?). But they might be onto something.
Time points to the 2032 Olympic and Paralympic Games, which will be hosted in the maroon metropolis. Brisbane will do a fine job, even though it’ll baffle the world when rugby league is added to the schedule and Queensland is allowed to field its own team.
Time’s most radical claim is that Brisbane is worth visiting now, but tourism is surging. Not only did Lin-Manuel Miranda recently drop in to catch Hamilton , but hundreds of Hamilfans flew up to watch his interview with Leigh Sales (presumably unaware that it would subsequently arrive on iView for free).
A leading local agent has appraised each side of these duplex's to be worth $665k on completion and rent for $495 per week. So that is massive potentail instant equity of up to $390K on completion, which is incredibly hard to find.