Building wealth
3 reasons there might be an investor resurgence
Towards the end of last year, some of those large-scale measures taken by the Australian Prudential Regulatory Authority (APRA) and the Reserve Bank started to take effect. With speed limits put on property investment home loans, fewer people were borrowing in this buyer group.
Meanwhile, owner-occupiers started to rise in number and confidence. The measures came into force because there was concern about the market getting far too heated. But now that we've got a bit of daylight between us and the changes, here are three reasons that 2016 could see investors come back into play.
There was never a bubble
It's apparent that conditions are starting to return to normal.
One of the big concerns in the media was that property investors were causing a housing bubble with all their borrowing. But now that Sydney and Melbourne are slowing down at a reasonable pace (and people have started looking at Queensland property), it's apparent that conditions are starting to return to normal.
In fact, CoreLogic recently noted that growth for investor lending was at 7.9 per cent over the year to February - well below APRA's limit on it. As Cameron Kusher from the research company states, maybe that means there's some wiggle room on current restrictions?
Interest rates could go down again
Do you know the last time the Reserve Bank raised the cash rate? It was November, 2010. That's coming up on six years ago! In fact, in his last cash rate statement, Reserve Bank Governor Glenn Stevens said that if inflation stays low, then there might be "scope for easier policy".
Banks won't necessarily take the RBA's lead, but it would open the door for them to potentially cut interest rates - something that might be pretty appealing for real estate investors.
Let's tick off reasons property investors might have reason to start getting excited.The capital gains are still there
One of the great things about investing in new real estate, particularly in Queensland, is that capital gains are still ripe for the earning. As Mr Kusher wrote on March 7 about property, "total returns are still substantially higher than all other asset classes".
Even if conditions have moved slightly against property investors recently, there's still so much good news in the big picture - especially when it comes to Queensland real estate.
As always, that doesn't mean you should rush in headfirst with a home loan. Take your time, come and talk to the team at Think Money, and we'll help you on the path to significant wealth creation.
