Invest
Property love affair predicted to 'sour quickly’ amid changes
Property investors have been warned, by an economist, that “the fundamental nature of the Australian residential property market has changed” and they must prepare for oncoming headwinds.
Property love affair predicted to 'sour quickly’ amid changes
Property investors have been warned, by an economist, that “the fundamental nature of the Australian residential property market has changed” and they must prepare for oncoming headwinds.
ABC Bullion chief economist Jordan Eliseo says while the Australian housing market has enjoyed a bull run, there were many factors now likely to constrain it.
“Just like the ‘golden era’ for financial asset price appreciation is almost certainly behind us, so too is the period of rapid Australian house price appreciation,” Mr Eliseo said.
“The marginal buyer is now a debt-laden property speculator reliant on perpetual capital appreciation to justify their investment. Absent this, their love affair with property will sour very quickly, with profound ramifications.”
The regulatory environment that helped foster the tremendous price rises witnessed over the last decade will likely be dismantled one way or another, according to Mr Eliseo.
“Whether it’s alterations to negative gearing rules, removing the exemption of the family home from the assets test for pensioners, eliminating the CGT-free status of Australian owner-occupied housing, a more stringent clampdown on foreign buyers, banning SMSFs from borrowing to purchase, stricter APRA regulations regarding the growth in investor loan books, altered risk weightings and capital requirements or some combination of the above of course remains to be seen,” he said.
“Of course, [I’m] not suggesting that the government, the RBA or APRA will deliberately try to engineer lower prices, but some form of change is inevitable, and once made, it will not necessarily be as house price friendly as the current environment.”
While interest rates are at historic lows, an inflationary environment is expected to gradually emerge in the coming years, placing even greater pressure on property investors.
“Research suggests that today, close to 25 per cent of Australian mortgage holders are in some form of mortgage stress, and would struggle to cope with rate hikes of even 50 basis points,” Mr Eliseo said.
This, in turn, could seriously threaten Australian investors.
“Any declines in the housing market, or indeed even just a prolonged period of largely stable prices in nominal terms whilst wages, rents and inflation play catch up, will have a profound effect on the average Australian investment portfolio, as well as the overall financial position of many Australian households,” Mr Eliseo said.
“[You] should keep these challenges front of mind when reviewing and constructing an appropriate portfolio for the decade ahead.”
Property
Population falls could see Australia with 232,000 vacant dwellings
The shutdown of international borders could cut demand for Australian housing by as much as 232,000 dwellings over the next three years, according to research. ...Read more
Property
How will border closures impact the property market?
Despite falling migration levels, property prices might not be impacted as much as investors think, an industry expert has explained. ...Read more
Property
Sydney, Brisbane, Melbourne tipped to surge: Westpac
One of Australia’s largest banks is forecasting strong growth in the housing market as low interest rates and availability of credit pushes prices up, despite the country being in its first recessio...Read more
Property
Is now the right time to make a tree or sea change?
The experience of isolating in our homes and suburbs has made many people reconsider what they actually value in a home, writes David Hancock. ...Read more
Property
Hot Property: Biggest headlines this week
Victoria’s COVID-19 restrictions have begun to lift as the rest of the country watches on: Here are the biggest property stories from this week. ...Read more
Property
Post-pandemic hotspots revealed
With investors eyeing investment opportunities, which hotspots are set to benefit? ...Read more
Property
Houses fall by nearly $100bn
The COVID-19 pandemic has seen a correction in the housing market, with capital cities falling by $98 billion in total value, official figures have shown. ...Read more
Property
Could changing tax law boost regional property prices?
Property investors are urging the Australian government to change tax deductions for travel expenses related to their investment property as a way to stimulate the regional housing market. ...Read more
Property
Population falls could see Australia with 232,000 vacant dwellings
The shutdown of international borders could cut demand for Australian housing by as much as 232,000 dwellings over the next three years, according to research. ...Read more
Property
How will border closures impact the property market?
Despite falling migration levels, property prices might not be impacted as much as investors think, an industry expert has explained. ...Read more
Property
Sydney, Brisbane, Melbourne tipped to surge: Westpac
One of Australia’s largest banks is forecasting strong growth in the housing market as low interest rates and availability of credit pushes prices up, despite the country being in its first recessio...Read more
Property
Is now the right time to make a tree or sea change?
The experience of isolating in our homes and suburbs has made many people reconsider what they actually value in a home, writes David Hancock. ...Read more
Property
Hot Property: Biggest headlines this week
Victoria’s COVID-19 restrictions have begun to lift as the rest of the country watches on: Here are the biggest property stories from this week. ...Read more
Property
Post-pandemic hotspots revealed
With investors eyeing investment opportunities, which hotspots are set to benefit? ...Read more
Property
Houses fall by nearly $100bn
The COVID-19 pandemic has seen a correction in the housing market, with capital cities falling by $98 billion in total value, official figures have shown. ...Read more
Property
Could changing tax law boost regional property prices?
Property investors are urging the Australian government to change tax deductions for travel expenses related to their investment property as a way to stimulate the regional housing market. ...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
