Is now a good time to invest in Australia?
2017 has seen vast shifts in the property markets with the raft of changes in real estate regulations. But beyond these changes, there are bigger macroeconomic factors responsible for shaping the current state of play in the industry.
With a multitude of factors surrounding investment decisions, we look at what you need to know about the markets and useful tips to help you get started in your investment journey.
Bane or boon?
Saturday the 1st of July 2017 saw the Andrews stamp duty government scheme come into effect in Victoria.
The stamp duty revamp was poised to fuel a surge in market demand – properties valued up to $600,000 are duty-free and those up to $750,000 are offered savings on a sliding scale.
The current conditions would suggest otherwise however, with little impact recorded over July’s first weekend. Auction numbers were down and clearance rates only marginally higher on the first weekend of July 2017.
Melbourne recorded a 73.5 per cent clearance rate, on par with the same weekend last year. 732 homes were listed for auction, a number far surpassing last year’s weekend impacted by Federal Election Day.
Bricks and mortar: A bleak picture?
The latest statistics show signs of an ailing property market, with property transactions declining following the usual mid-winter school holidays.
Looking at the bigger picture, there is evidence that the housing market conditions are slowing. In addition to weaker auction clearance rates, the annual pace of capital gains in Melbourne has eased from 15.9 per cent three months ago to 13.7 per cent over the twelve months ending June 2017.
Home prices are set to keep rising over the winter period, as supply will continue to wane while demand remains strong. The expected countermeasure by APRA is to step in to further tighten the screws on property investors and attempt to slow down home price growth.
A recent survey conducted by Galaxy Research found that 65 per cent of Australians were anxious about whether property investment is viable. 35 per cent of people felt it was too difficult to raise sufficient funds for a deposit, 33 per cent were concerned with taking on too much debt while 23 per cent said investment properties were too expensive where they reside.
To make matters worse, interest rates are unlikely to stay static for much longer. The latest announcement from the RBA was to hold the interest rate at 1.5 per cent. Nonetheless the majority of experts and economists believe that a rate rise should be round the corner, coinciding with APRA’s measures. Consequently, mortgage holders should brace for rate hikes sooner rather than later. Graham Cooke, Insights Manager at finder.com.au stated: “It’s no secret that rates will start rising soon, it’s just a matter of when.”
Is the grass greener on the other side?
Joanna Pretty, general manager at State Custodians, says: “It is understandable that people are nervous about investing in property at the moment considering growth in wages has not kept pace with rising dwelling prices and cost of living.”
Despite the doom and gloom in the market, there are still opportunities to capture in this period.
Bryce Holdaway, property expert and co-host of the Property Couch podcast offers his advice on investment fears and useful tips you can follow to help you navigate the markets:
- Fear 1: Difficulties in funding a deposit
“I think it’s just looking outside the square. You can come up with some other form of collateral. It doesn’t have to be a cash deposit. You can borrow some of the equity in your home and use that to fund the deposit and costs”
- Fear 2: Taking on too much debt
“There are three different types of debt – horrible, tolerable and productive.” Most people think they are the same. Wealthy people know how to allocate their wealth so that debt works in their favor, and so should you.
- Fear 3: Properties are too expensive in my area
Go borderless and in other regions. If you live in a rural town and the market is not performing, shift your focus to the metropolitan regions or even interstate.
- Fear 4: Securing a loan is hard
“Get an investment-savvy mortgage broker to do the legwork for you. They’re dealing with the changing landscape hourly.”
You come first
With over 25 years of industry experience, Xynergy Realty can provide you with an unparalleled depth of practical and technical knowledge of property markets and wider trends in the real estate industry.
We offer professional consultation from buying investment properties to designing and building House and Land Packages for first time homebuyers. In addition, our affiliations with the largest and well-renowned developers allow us to source properties in the finest estates at competitive prices.
We also provide mortgage broking services to assist our clients through the life of their mortgages. From planning and arranging mortgages, to securing property investment loans, we will tailor a solution that looks after your needs.
Should you need further advice, feel free to consult our property management team at Xynergy Realty.