Mortgage holders are facing a sooner-than-expected cash rate rise after the Reserve Bank of Australia (RBA) revised its outlook due to the economy bouncing back strongly from the Delta outbreak. So just how soon can we expect a rate rise?
As widely predicted, the RBA on Tuesday kept the official cash rate at the record low level of 0.1% for the 12th consecutive month.
But it was the wording in the RBA’s monthly statement that really caught the attention of pundits.
For the first time in a very long time, the key phrase “will not be met before 2024” was not included when referring to scenarios that needed to occur to trigger an official cash rate rise.
And in a later webinar speech, RBA Governor Philip Lowe said it’s now “plausible that a lift in the cash rate could be appropriate in 2023”.
For months, economists from financial institutions around the country have called on the RBA to revise their targets, with some predicting the cash rate rise could happen as early as November 2022, including Commonwealth Bank and AMP.
That’s right – possibly less than a year away.
Now, we understand this will be a nervy period for some mortgage holders, especially the younger ones.
After all, more than one million homeowners have never experienced an official cash rate rise (the last rise was back in November 2010).
So rest assured we’ve got your back – we’re here for you if you have any questions or concerns about what rising interest rates could mean for your mortgage.
The RBA’s statement sums it all up pretty neatly, but here’s the CliffsNotes version: as vaccination rates increase and restrictions are eased, the Australian economy is expected to recover relatively quickly from the interruption caused by the Delta outbreak.
“The Delta outbreak caused hours worked in Australia to fall sharply, but a bounce-back is now underway,” explains the RBA.
Now, the RBA says it will not increase the cash rate until actual inflation is sustainably within the 2-to-3% target range.
However, inflation has already picked up to 2.1%.
The RBA insists it’s in no rush though, saying it expects any further pick-up in underlying inflation to be gradual.
“This will require the labour market to be tight enough to generate wages growth that is materially higher than it is currently. This is likely to take some time,” the RBA statement says.
“The Board is prepared to be patient, with the central forecast being for underlying inflation to be no higher than 2.5% at the end of 2023 and for only a gradual increase in wages growth.”
Well, the most obvious impact of a cash rate rise is that interest rates will go up, which means your home loan repayments might increase each month.
And that could have a flow-on effect for other parts of the economy, such as housing values, explains CoreLogic’s research director Tim Lawless.
“We are already seeing the rate of house price appreciation ease due to affordability pressures, rising stock levels and, as of November 1st, tighter credit conditions,” says Mr Lawless.
“Once interest rates start to lift, there is a strong chance that housing prices will head in the opposite direction soon after.”
Well, that depends on your current financial situation.
If you’re a prospective first home buyer suffering from FOMO, or someone looking to upgrade over the next two years, don’t be disheartened by increasing property prices: now’s the time to start planning ahead.
Planning ahead involves understanding your borrowing capacity, your property goals, and your current expenditures – this can help you determine what changes you can make before you pull the trigger on a purchase.
On the other hand, if you’re a current mortgage holder, now could be a good time to reassess whether you should lock in a fixed interest rate.
Indeed, many lenders have recently increased the interest rates on their 2-, 3-, 4- and 5-year fixed-rate home loans to head off the cash rate rise, and this latest statement from the RBA could trigger more rate hikes.
So if you’ve been on the fence about fixing your rate, it’s definitely worth getting in touch with us sooner rather than later.
We can run you through a number of different options, including fixing your interest rate for two, three, four or five years, or just fixing a part of your mortgage (but not all of it).
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
More than half of Australian house hunters spend the same amount of time inspecting a property as they do watching an episode on Netflix, according to new research.
We get it. You see a house you like and you immediately want to buy it, warts and all.
But take a breath, as FOMO can be costly – with a third of recent purchasers admitting to “buyers regret”.
Not doing your due diligence on a property can also have implications when applying for finance if the lender’s valuation doesn’t come in at what you expected.
And it turns out that a lot of house hunters are leaping before they look right now.
A recent survey of 1,000 property owners by lender ME revealed that 55% of house hunters spent less than 60 minutes checking out the property they eventually purchased, despite it being one of the biggest purchases of their lifetime.
That’s about the length of a standard 55 minute Netflix episode.
Turns out we haven’t just become better at bingeing during COVID-19.
COVID-19 has also reduced the time buyers have to check out properties.
But it’s not always the purchaser’s fault.
About two-thirds (65%) of recent buyers said “real estate restrictions impacted their ability to inspect and purchase their property”.
And surprisingly, almost half (45%) of buyers restricted by lockdowns admitted to doorknocking vendors to ask for an inspection on the sly, as well as looking at photos and/or videos of the property.
The lack of inspection time led to around 61% of Australian home buyers discovering issues with their property after moving in.
Around 40% of this group said they missed picking up the issues because they “lacked the skill or experience in inspecting the property”, while 33% simply “fell in love with the property and overlooked them”, and 18% were “impatient and concerned by rising prices”.
Overall, the top post-purchase problems included construction quality (32%), paintwork (28%), gardens and fences (23%), fittings and chattels (21%) and neighbours (17%).
Among owners who identified issues:
– 34% experienced a degree of “buyers regret” following the purchase.
– 58% would have paid less for the property had they discovered the problems earlier.
– 84% spent money fixing, replacing or improving the issues identified, or have plans to do so.
The moral of the story? Emotions are always involved when purchasing a home, which can cloud your judgement.
“Give weight to any niggling hunches that give you cause for concern and get a professional property inspector to do the looking for you,” says ME General Manager John Powell.
“It is also important to know your borrowing capacity in advance so you can buy your home with full confidence knowing you’ve got solid financial backing.”
As mentioned above, it’s important to know your borrowing capacity before you start house hunting so you don’t stretch yourself beyond your limits.
So if you’d like to find out what you can borrow – get in touch today. We’d be more than happy to sit down with you, take a breath, and help you work it all out.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
We’ve all been guilty of the odd credit card mix-up from time to time – it happens! But if you’re consistently relying on a personal credit card to pay your business expenses – like 4-in-10 SME owners – then it’s probably time to explore other funding options.
The past 18 months have been tough for a lot of businesses around the country – I’m sure you don’t need us to remind you of that.
As such, 2-in-3 businesses (66.1%) are trying new funding options to help them build their way out of the pandemic, according to a poll of 1255 small businesses by SME non-bank lender ScotPac.
That’s a rapid rise from the start of 2021 when only 46% were introducing new funding.
The top three reasons SMEs have for seeking new funding sources are to buy plant and equipment (57.5%), improve cash flow (40.6%) and pay down debt (34.3%).
When asked what new types of funding they had introduced over the past year to keep their business moving, more than half the SMEs (55.4%) said they turned to owner funds, with 42.5% relying on personal credit cards.
You know the old saying “you shouldn’t mix business with pleasure”?
Well, this is one of those times.
It’s very likely there are much more suitable options available for your business that will help you separate your business and personal expenses, and make it easier for you to forecast your cash flow – to name just a couple of good reasons.
“We’d encourage business owners, particularly if they are relying on personal credit cards, to seek professional advice about more sustainable funding options,” says ScotPac CEO Jon Sutton.
Other common (and likely more appropriate) types of new funding that SMEs have turned to over the past year include asset and equipment finance (38%) and government stimulus funds (27.6%).
Demand for invoice finance as a new source of funding has also more than doubled since 2018 to 16.3% – not far behind the percentage of businesses taking out a new overdraft (20%).
The SME finance space is constantly evolving – and we make it our business to make sure we stay abreast of the new funding options and players that can help your business.
So if you’re in need of finance for your business, but don’t know where to start, get in touch today.
We’d love to run you through the growing number of funding options available for SMEs just like yours.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Are the days of ultra-low fixed interest rates over? It’s looking increasingly so, with two major banks increasing their fixed rates this week. So if you’ve been thinking about fixing your mortgage lately, it could be time to consider doing so.
Do you know how when one tectonic plate shifts, others around it soon follow?
Well, in the past week, the Commonwealth Bank (CBA) and then Westpac hiked the interest rates on their 2-, 3-, 4- and 5-year fixed-rate home loans by 0.1% (for owner-occupiers paying principal and interest).
Meanwhile, ING also lifted its fixed rates on 2- to 5-year terms by 0.05% to 0.2%.
For mortgage-holders, it’s a clear ol’ rumbling sign that the days of super-low fixed interest rates are coming to an end.
The Reserve Bank of Australia (RBA) has repeatedly insisted the official cash rate isn’t likely to rise until 2024 at the earliest.
But it seems the banks don’t believe them. The banks think it’ll happen sooner.
CBA, for example, is currently predicting the RBA will increase the official cash rate in May 2023, while Westpac is predicting a rate hike in March 2023 – both well before the RBA’s 2024 timeline.
Given that’s about 18 months away, the major banks are now adjusting the fixed rates on fixed terms of 2-years and longer, in order to head off the expected rise in their funding costs.
“Lenders are scrambling to lift fixed rates before they start to feel the margin squeeze,” explains Canstar finance expert Steve Mickenbecker.
“Borrowers shouldn’t be so complacent as they must expect rises inside two years, and the closer they get to that point, the less attractive the fixed rates alternative will be.
“They may want to consider fixing their interest rate for three years or longer, while the going is still good.”
Interestingly, a number of the banks – including CBA and ING – simultaneously slashed interest rates on some of their variable-rate home loans this week.
And CBA even cut their 1-year fixed rate by 0.1% (for owner-occupiers paying principal and interest).
So why did they do this when (longer-term) fixed rates are going up?
Well, aggressively competing for customers on variable-rate mortgages (and 1-year fixed) makes sense for lenders when a cash rate hike is predicted to be at least 18 months away.
They can always increase their variable rates when needed, but they can’t do the same for borrowers locked in on longer-term fixed-rate mortgages.
As mentioned above, when the big banks make a move, it’s not uncommon for other lenders to follow suit – as seen with ING this week.
So if you’ve been on the fence about fixing your rate, it’s definitely worth getting in touch with us sooner rather than later.
We can run you through a number of different options, including fixing your interest rate for two, three, four or five years, or just fixing a part of your mortgage (but not all of it).
If you’d like to know more about this – or any other topics raised in this article – then please get in touch today.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Almost 33,000 Australians bought their first home four years sooner thanks to two federal government schemes that give first home buyers a leg up into the property market. Could you, or someone you know, be eligible?
We love a feel-good news story around here.
And hearing that so many first home buyers got a leg up into the property market much sooner than they ever dreamed makes us feel pretty warm and fuzzy.
This week the federal government released figures on the popular First Home Loan Deposit Scheme (FHLDS) and New Home Guarantee (NHG) initiatives.
The data showed that the two initiatives supported 1-in-10 first-time homeowners during the 2020-21 financial year.
And on average, the schemes allowed those first home buyers to bring forward their home purchases by four (FHLDS) to 4.5 years (NHG).
The FHLDS allows eligible first home buyers with only a 5% deposit (rather than the typical 20% deposit) to purchase a property without forking out for lenders mortgage insurance (LMI).
This is because the federal government guarantees (to a participating lender) up to 15% of the value of the property purchased.
Not paying LMI can save buyers anywhere between $4,000 and $35,000, depending on the property price and deposit amount.
The NHG scheme is very similar but is only for new builds – such as house and land purchases or a land purchase with a contract to build.
Another key difference is that the NHG property price caps are higher (see here) to account for the extra expenses associated with building a new home.
Mostly younger buyers!
According to the latest stats, 58% of all buyers under the schemes are aged under 30-years-old.
NSW (11,000 residents) and Queensland (9,000 residents) make up nearly two-thirds of the scheme’s recipients.
And it turns out that most first home buyers who secured a spot in one of the schemes used a mortgage broker (56%).
But for the NHG scheme specifically, brokers originated the vast majority of government guarantees (72%).
We’ve got good news. And a bit of not-so-good news.
The good news is that for the NHG, only 2,443 of the 10,000 spots had been secured as of October 6 – so there’s still the opportunity for eager first home buyers wanting a new build.
The not-so-good news is that spots in the FHLDS are almost full for the latest round released on July 1.
Figures show that 7,784 of the 10,000 spots have already been secured, and word is that participating lenders have waiting lists for many of the remaining spots.
That said, if you’re a single parent there’s a third, similar scheme called the Family Home Guarantee (FHG), which allows eligible single parents with dependants to build or purchase a home with a deposit of just 2% without paying LMI.
Only 1,023 of 10,000 spots have been secured in the FHG, for which you don’t need to be a first home buyer.
Last but not least, it’s worth noting that the FHLDS is an annual scheme with new spots expected to be available from July 2022 – and previously the federal government made a surprise announcement to release 10,000 additional spots in January.
So if any of the above schemes are of interest to you, get in touch with us today and we can run you through everything you need to know about them so that you’re ready to apply when the time comes.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
While many SME owners worry about their access to finance, a surge of new lenders and products is rapidly expanding the options available. And brokers have an important role to play for businesses, says the Productivity Commission.
Changes to lending markets over the past decade mean there’s now a wide range of business finance options that don’t require property as security, according to a new report by the Productivity Commission.
However, a lack of awareness of these new finance options is one of the biggest hurdles preventing SME owners from accessing them.
This is where a broker with up-to-date market knowledge can play an important role for your business, explains the Productivity Commission.
“SMEs may not be aware of all their lending options and may not feel confident about new options. Brokers can help match them with appropriate lending options,” the Productivity Commission says.
“These options include borrowing against alternative collateral – such as vehicles, machinery and intangible assets (for example, invoices and other expected receipts) – and unsecured lending.”
Changes to prudential rules have made lending to SMEs less attractive for the major banks, but at the same time, created opportunities for new and established non-bank lenders, says the Productivity Commission.
This has resulted in a broader range of lending options beyond traditional property-secured loans for SMEs, especially with the emergence of fintechs and more accessible borrower data.
“Combining new data sources with innovative analytical tools (such as artificial intelligence and machine learning) has given many lenders the information and confidence to lend to SMEs without the security of property,” adds the report.
However, while most SMEs are aware of banks as a source of finance, awareness of the newer options is more limited.
As brokers, we’re constantly upskilling and learning to make sure we stay abreast of the latest finance options and players in the SME finance space.
“Brokers are expected to have current market knowledge and participate in ongoing training to stay informed about new lenders and products,” explains the report.
“For example, aggregators and industry associations hold various educational events – including conferences, workshops and webinars – to improve brokers’ understanding of SME lending options.”
And it’s for this reason that the Productivity Commission highlights the key role brokers can play for busy SME owners.
“By connecting borrowers to lenders, brokers can play an important education role, particularly for those SME customers that do not have the time or inclination to undertake detailed market research,” says the report.
So if you’re in need of finance for your SME business, but don’t know where to start, get in touch today.
We’d love to run you through the growing number of finance options available for SMEs like yours.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Some borrowers will soon find it harder to get a mortgage after the banking regulator announced tougher serviceability tests for home loans. So who will they impact most?
The Australian Prudential Regulation Authority (APRA) will increase the minimum interest rate buffer it expects banks to use when assessing the serviceability of home loan applications from 2.5% to 3% from the end of October.
This means that banks will have to test whether new borrowers would still be able to afford their mortgage repayments if home loan interest rates rose to be 3% above their current rate.
APRA estimates the 50 basis points increase in the buffer will reduce maximum borrowing capacity for the typical borrower by around 5%.
“The buffer provides an important contingency for rises in interest rates over the life of the loan, as well as for any unforeseen changes in a borrower’s income or expenses,” APRA Chair Wayne Byres wrote in a letter to the banks.
This move doesn’t come out of the blue. Federal treasurer Josh Frydenberg flagged tougher lending standards a week prior following a meeting with the Council of Financial Regulators.
And it’s due to a combination of factors.
Firstly, interest rates are at record-low levels, and secondly, the cost of the typical Australian home has increased more than 18% over the past year – the fastest annual pace of growth since the late 1980s.
That combination has made financial regulators a little worried that some homebuyers are starting to stretch themselves too thin and borrow more debt than they can safely afford.
Mr Byres adds that 22% of loans approved in the June quarter were more than six times the borrowers’ annual income. That’s up from 16% a year prior.
As such, APRA did consider limiting high debt-to-income borrowing but believed it would be more operationally complex to deploy consistently.
“And it may lead to higher interest rates for some borrowers as lenders effectively seek to ration credit to this cohort,” APRA adds, but it doesn’t rule out limiting high debt-to-income borrowing in the future.
The increase in the interest rate buffer will apply to all new borrowers.
However, the impact is likely to be greater for investors than owner-occupiers, according to APRA.
“This is because, on average, investors tend to borrow at higher levels of leverage and may have other existing debts (to which the buffer would also be applied),” APRA adds.
“On the other hand, first home buyers tend to be under-represented as a share of borrowers borrowing a high multiple of their income as they tend to be more constrained by the size of their deposit.”
If you’re worried about how this latest announcement from APRA could impact your upcoming application for a home loan, then get in touch today.
We can apply APRA’s new loan serviceability tests to your personal circumstances to help you determine your borrowing capacity and focus your house hunting.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
The federal treasurer has given the strongest indication yet that a home loan crackdown is coming, stating that “carefully targeted and timely adjustments” may be necessary to avoid troubled waters. So what could a potential lending crackdown look like?
Lending standards and fast-rising property prices have been hot topics of late.
Interest rates are at record-low levels, and the typical Australian home has seen its value increase more than 18% over the past year – the fastest annual pace of growth since the late 1980s.
It’s a recipe that’s making financial regulators a touch worried that some homebuyers are starting to stretch themselves too thin and borrow more debt than they can safely afford.
So federal treasurer Josh Frydenberg recently met with the Council of Financial Regulators – which includes APRA, ASIC, the Australian Treasury and the RBA – to discuss the state of the housing market.
“We must be mindful of the balance between credit and income growth to prevent the build-up of future risks in the financial system,” Mr Frydenberg said in a statement.
“Carefully targeted and timely adjustments are sometimes necessary. There are a range of tools available to APRA to deliver this outcome.”
Here’s an interesting stat for you: almost 22% of Australians have a mortgage debt that’s more than six times higher than their annual income, according to the latest data from APRA.
That’s up from 16% just one year ago.
The fact APRA mentions that particular stat gives us a pretty good clue as to what one possible lending crackdown measure could be.
“Most analysts expect that this time, APRA will target debt-to-income ratios, probably by limiting the proportion of loans that can be made above six times an applicant’s household income,” explains the ABC.
It’s also worth noting that Mr Frydenberg and APRA are not the only ones to publicly indicate that change could be on the horizon – the RBA expressed similar concerns about the increase in housing prices and housing debt just days ago, too.
“Even though the banks have strong balance sheets and lending standards are being maintained, there is a risk that in this environment, households will become increasingly indebted,” RBA assistant governor Michele Bullock wrote.
“A high level of debt could pose risks to the economy in the event of a shock to household incomes or a sharp decline in housing prices. Whether or not there is need to consider macro-prudential tools to address these risks is something we are continually assessing.”
It’s worth reiterating that we still have very limited information available about what financial regulators have in mind for any potential lending crackdowns.
What we can do, however, is help you assess your potential debt-to-income ratio on any property purchase you currently have in mind. And we can also help you determine your borrowing capacity in the current lending landscape.
So if you’d like to find out more, get in touch today. We’d be more than happy to run you through it all in more detail according to your personal circumstances.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Almost one-in-two SMEs have applied for new funding in the last six months, a new report has found, and of those SMEs only half were successful in obtaining the full amount they were seeking.
If you haven’t already figured it out over the past 18 months, small and medium-sized business owners are a pretty resilient bunch.
You know that classic 90’s Chumbawamba song: “I get knocked down, but I get up again…” Yeah, life as an SME owner can be a little like that at times.
In the latest round of knock-downs, a survey of 1750 SMEs nationwide, conducted by East & Partners and Judo Bank, found that 48.1% of SMEs had applied for new funding in the last six months.
And of those SMEs, only 50.4% were successful in accessing the full amount, 22% were partially successful, and 27.7% were unsuccessful.
It seems the bigger you are, the better your chances of securing funding.
Twice as many businesses in the $1 million to $10 million turnover range were unsuccessful in their application for funding (36.5%), compared with just 15.9% in the $10 million to $50 million turnover category.
And difficulty accessing new funding is especially pronounced if you work in the retail space, with 44.4% of retailers unable to secure new funding compared to a mere 8.6% of builders.
SMEs are primarily borrowing for working capital (91.1%), investment in new plant and equipment (48.1%), and COVID-19 related provisions including bridging finance (45.6%).
One-in-four SMEs also want new funding to hire more staff (25.9%).
Times are tough for many businesses, there’s no doubt about that.
So if you’re an SME owner in need of funding, get in touch today and we can take the lead on helping you source finance.
The sooner we can discuss your options with you, the better placed your business can be to get through 2021 and thrive beyond.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
With house prices going gangbusters in the first half of 2021, is it still a good time to buy property? The majority of investors think so, according to the latest annual survey. And investors have their sights set on one city in particular.
The 2021 PIPA Property Investor Sentiment Survey, which gathered insights from 800 property investors across the country in August, found more than 76% of investors believed property prices in their state or territory would increase over the next 12 months.
That’s up strongly from 41% this time last year, when COVID-19 had some investors a touch nervous.
“When we think back to last year, which was a time of much fear and uncertainty, it’s clear that property investors and the market, in general, has weathered that turbulent period better than anyone dared to hope,” said PIPA Chairman Peter Koulizos.
Here are the top five trends the PIPA survey identified.
This year’s survey found that nearly 62% of investors believe that now is a good time to invest in residential property, which is a tad down from 67% in 2020.
PIPA says that dip in confidence may be due to the high property price growth this year as well as significant lockdowns taking place at the time of the survey.
This year’s survey produced the biggest ever margin when it came to the location investors believe offers the best potential over the next year.
“A staggering 58% believe the sunshine state [Queensland] offers the best property investment prospects over the next year – up from 36% last year,” Mr Koulizos says.
New South Wales came a distant second at 16% (down from 21%), and Victoria was third at 10% (significantly down from 27%).
Brisbane also beat its capital city counterparts, with 54% of investors believing it has the rosiest outlook.
Mr Koulizos says the boost could be to do with Brisbane being named host of the 2032 Olympic Games, and significant upcoming infrastructure spending.
“All of these factors, as well as the affordability of property in southeast Queensland and strong interstate migration, are some of the reasons why investors are so optimistic about market conditions there,” he adds.
While investors still believe metropolitan markets offer the best investment prospects at nearly 50% (down from 61% in 2020), regional and coastal markets are closing the gap.
A quarter of property investors now favour regional markets (up from 22%), while 21% of survey respondents have their eye on coastal areas (up strongly from 12% last year).
The lingering impacts of the global health emergency – as well as robust price growth over the past year no doubt – mean fewer investors (59%) are looking to sell a property this year compared to last year (71%).
“Part of the reason for the uplift in property prices over the past year has been the continued low levels of supply in most locations around the nation,” Mr Koulizos notes.
“With a decrease in the number of investors indicating they intend to sell over the short-term, it seems unlikely that this boom market cycle is going to change anytime soon.”
Just 17% of respondents secured their last investment loan directly via a bank, while 4% used a non-bank lender.
The vast majority (72%) of respondents secured their loan through a broker, a slight increase on last year’s figure of 71%.
And 72% of respondents said they’d use a broker to finance their next investment loan.
It just goes to show that it doesn’t matter how far you are on your property journey – whether you’re a first home buyer, refinancer or savvy property investor – we can help you every step of the way.
So if you’re looking to add to your property portfolio, looking for a change of scene, or keen to crack into the market, get in touch today.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
