Have you been waiting for a sign to enter the property market?
I speak with many investors who want the waters to be “just right” before they dive in.
I understand their reasoning and it is probably even more understandable given the year we have had!
But, I believe the right time is when you are ready, as there will never be a “perfect time”.
Granted, there have been few positive signs and reasons to get into our property markets over the past 6 months.
But things appear to be turning and momentum may be shifting.
Here are my thoughts and 3 reasons I feel there may be a small window of opportunity;
1. Home Buyers are Back!
This is certainly something that has stood out for us at ground level over the last 3 – 6 months.
The current environment is definitely not deterring home buyers and currently only 21% of the market is made up of investors.
If your job is secure and you have a steady income, the appeal of interest rates circa 2% is proving difficult to ignore.
Home Buyers are seeing this as an opportunity and taking the appropriate action.
There has also been a Government stimulus that has flowed through to First Home Buyers.
Investors may be waiting things out, but homebuyers are piling into the market in record numbers and there may be more to come, given the figures below;
Refinancing for Owner-Occupiers around our biggest capital cities is heading skywards, with Queensland leading the way according to ABS via Pete Wargent;
- QLD up 34%
- NSW up 29%
- VIC up 24%
Rising demand for the right type of property in superior locations will follow suit.
2. Bank Regulations Loosen
Many are quoting this as the game-changer for our property markets.
We’re a decade or more on from the GFC and a decade of consistently tightening the screws for lenders, we are finally seeing the first signs of a loosening of regulations.
According to our Treasurer, we could see the following changes come March next year;
- Simplifying Australia’s credit framework to ensure consumers and small businesses can get timely access to credit;
- Enabling a more efficient flow of credit to consumers and small businesses while maintaining strong consumer protections, through changes to Australian credit laws;
- Improving the flow of credit to support business investment and create jobs.
While the devil is in the detail, put simply, it could increase some people's borrowing capacity by as much as 20%.
We have also seen some of the big banks, such as Westpac decrease their servicing rate in recent months to also boost borrowing capacities.
In addition, interest rates are not going anywhere in the short term, with further talks of a potential cut.
3. Confidence
The confidence I feel is a crucial indicator of our property markets.
It has clearly been affected detrimentally due to recent global events.
After months of record lows in confidence, the tide is starting to turn, lifting 32% in the last two months, according to Westpac.
As we come out of Lockdowns and things start to slowly return to normal, I can only see this number continuing to strengthen.
Especially given recent tax cuts and further stimulus measures to come.
Adding a low-interest-rate environment to that and it is hard to see confidence falling to record lows any time soon.
Sure, they have been talks of major hurdles when Job Keeper ends and Mortgage holidays are over, but this will not affect the majority of Australians.
The Government has put in too much work and capital for them to just let us fall off a cliff and banks will be the same.
They are not interested in taking people's houses away and will continue to work with distressed mortgage holders on a solution.
Summary – A Window of Opportunity?
So while home buyers are diving in headfirst, I see a small window of opportunity for investors, particularly given their underrepresentation in the current market place.
Over the next few months, home buyers will continue to re-finance and position themselves in an attempt to enter the market.
It will also still take at least another 3 – 4 months for regulations to loosen and banks to implement changes.
As we head out of lockdowns and end uncertainty around the country early next year, consumer confidence will only get stronger.
For investors who are unsure or nervous, while there is no need to rush into anything, now represents an ideal opportunity to prepare.
Take this time to step back and put in place a plan, a strategy so you can take action when you feel the time is right.
Too many will do it the wrong way around, they will wait until the time is right before working out a plan.
They will then find themselves on the sidelines…. waiting…. maybe getting finance or still preparing while the market gets away from them as the smart investors take action.
Now is the time to take action and set yourself for the opportunities that will present themselves as the market moves on
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