Will tighter investment restriction see people flock to Queensland?
Recently, we saw a number of big lenders increase interest rates on home loans for investment property. On top of this, there are reports that some big banks have decreased their maximum loan value ratio for certain products from 90 per cent to 80 per cent. This means people have to come up with more money for a deposit on investment property, and it was put in place to try and balance out the market.
However, this new restriction could actually mean some great things for Queensland investment property. Are we going to be the focus of the next wave of investors?
Their pain, our gain
Tim Lawless from CoreLogic RP Data thinks that recent changes around investment indicate that the heat is going to come out of the Sydney and Melbourne markets, primarily due to affordability pressures and low rental yields. This could see capital gains dry up in the long term, meaning people start looking elsewhere for their profits from property.
One area that could benefit is Brisbane. Median house and apartment values here are significantly lower than in Melbourne or Sydney, which suggests that investors can spend less to meet LVR requirements, getting into real estate here at a lower cost.
It could be a way forward for many people concerned about changes in the real estate investment landscape, especially when you look at the growth that BIS Shrapnel forecast for our part of the country. In the next three years, our capital is expected to be one of the only areas to continue experiencing property growth - great for capital gains!
How do you work with tighter restrictions?
That being said, the tighter controls on investment home loans will also apply here. That means investors might find it harder to come up with capital to secure a deposit on a home loan, or to lock down a lower interest rate for their mortgage.
However, with the right wealth coaching and advice on property investment, it can be possible to set yourself up excellently with Queensland real estate. Understanding where growth hot spots will be (rather than where they already are), how much you need to spend and what your long-term prospects are will be vital to making a sound decision.
That's where the team here at Think Money can be valuable. We understand how people make money from property, and may be able to provide the advice you need to invest intelligently in the current interest rate conditions.