Invest
Help! My property is undervalued
Home-owners across Australia may feel uneasy about the softening market, but off-the-plan investors probably have it the worst.
Help! My property is undervalued
Home-owners across Australia may feel uneasy about the softening market, but off-the-plan investors probably have it the worst.
SMSF trustees have been warned to stay away from off-the-plan property as property prices fall and a slight apartment oversupply takes effect.
According to Omniwealth lending specialist Alfred Moller, off-the-plan investors are “starting to feel the pressure” as their properties slide from their original value.
He said investors in this situation should consider their ‘Plan B’, and the five considerations that come with it.
1. Do you have sufficient savings to meet a shortfall?
“If you purchase a property for $600,000 and it is valued at only $550,000 you would have to cover an additional $40,000 to settle,” Mr Moller said.
“The alternative is to borrow within lender's mortgage insurance (LMI), which is an insurance paid by you to cover the bank’s risk.”
2. Could you sell investment assets?
The second option to consider is whether assets like shares or other liquid assets could be used to cover the shortfall.
“Selling shares can be a great idea to cover a shortfall if you do not have savings, however you should be aware of potentially triggering a capital gains tax (CGT) event and you should talk to a qualified accountant first to be clear on your tax obligations,” he added.
3. Have you thought long term?
A momentary dip probably wouldn’t cancel out the long-term gains over five or 10 years, Mr Moller said, reminding investors to be prepared to hold the property over the long term.
“Keep in mind that you do not experience a loss until you sell your property, so any short-term market fluctuations will not impact you,” he said.
4. Let’s rewind – should you even buy this off-the-plan property?
There are evident risks in the off-the-plan market, Mr Moller said. This means investors can expect unfavourable valuations and some apartments in the Sydney metro area could be valued $80,000 less.
He said investors should be aware that, according to the Australian Bureau of Statistics, a further 19,038 units have been approved for April 2018 across the country. That’s a 5.7 per cent increase on April 2017.
5. Which suburbs are at risk?
“As the onslaught of completions and approvals outlive the perceived ‘property boom’, I expect no immediate improvement in the valuations of off-the-plan properties,” the lending specialist said.
“High-density residential developments such as Waterloo, Zetland, Parramatta and Docklands [in Sydney] are particularly at risk.”
Property
RBA’s 30% property growth forecast to materialise in 75% of regions
Experts believe that RBA’s forecasted 30 per cent growth in property prices over the next three years will materialise in 75 per cent of Aussie regions. ...Read more
Property
HomeBuilder applications soar as first-timers enter the market in record numbers
Record numbers of first home buyers are coming into the market assisted by the government’s HomeBuilder stimulus, which is expected to help spur $50 billion in economic activity. ...Read more
Property
Dual Occupancy Homes – Why They Are A Smart Investment In The Current Market
Promoted by Metricon ...Read more
Property
4 factors affecting property market trends in 2021
Following a tough 2020, property investment activity is expected to rebound strong, expanding by 50 per cent in the second half of 2021. ...Read more
Property
House prices tipped to surge 30% on the back of cheap money
According to new documents released from the Reserve Bank of Australia, persistently low interest rates could push up property prices by as much as 30 per cent. ...Read more
Property
Double-digit price growth to stick around as ‘property boom’ arrives
According to leading indicators, Australia’s property boom officially began in November, following several slow months on the back of the COVID crisis, with double-digit price growth already logged ...Read more
Property
How to turn your ‘costly’ lifestyle investment into a money-making asset
Emotionally driven holiday home buyers are being advised to seek maximum rental income and depreciation benefits to make their investments viable. ...Read more
Property
Dutch e-commerce giant VidaXL ramping up Australian operations
Netherlands-based online retailer VidaXL is ramping up its operations in Australia, by launching the build of a brand new 81,000 sq m national distribution centre in Melbourne. ...Read more
Property
RBA’s 30% property growth forecast to materialise in 75% of regions
Experts believe that RBA’s forecasted 30 per cent growth in property prices over the next three years will materialise in 75 per cent of Aussie regions. ...Read more
Property
HomeBuilder applications soar as first-timers enter the market in record numbers
Record numbers of first home buyers are coming into the market assisted by the government’s HomeBuilder stimulus, which is expected to help spur $50 billion in economic activity. ...Read more
Property
Dual Occupancy Homes – Why They Are A Smart Investment In The Current Market
Promoted by Metricon ...Read more
Property
4 factors affecting property market trends in 2021
Following a tough 2020, property investment activity is expected to rebound strong, expanding by 50 per cent in the second half of 2021. ...Read more
Property
House prices tipped to surge 30% on the back of cheap money
According to new documents released from the Reserve Bank of Australia, persistently low interest rates could push up property prices by as much as 30 per cent. ...Read more
Property
Double-digit price growth to stick around as ‘property boom’ arrives
According to leading indicators, Australia’s property boom officially began in November, following several slow months on the back of the COVID crisis, with double-digit price growth already logged ...Read more
Property
How to turn your ‘costly’ lifestyle investment into a money-making asset
Emotionally driven holiday home buyers are being advised to seek maximum rental income and depreciation benefits to make their investments viable. ...Read more
Property
Dutch e-commerce giant VidaXL ramping up Australian operations
Netherlands-based online retailer VidaXL is ramping up its operations in Australia, by launching the build of a brand new 81,000 sq m national distribution centre in Melbourne. ...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
