Invest
Shifting economic climate a risk for property investors
Changes in the country’s economic climate could present property investors with a crisis if they don’t prepare themselves, according to an accountant.
Shifting economic climate a risk for property investors
Changes in the country’s economic climate could present property investors with a crisis if they don’t prepare themselves, according to an accountant.
Michael Hutton, head of wealth management at HLB Mann Judd Sydney, said the changing economic climate could disrupt investors who are unwilling to adapt to new and potentially unknown changes.
“Property investors who have made their investment decisions on conditions that have prevailed in recent years could well find they are financially overstretched if the residential property environment changes in the way economists are predicting,” Mr Hutton said.
“Geared investors should always have a medium-term cash flow plan that covers likely events, as well as unforeseen circumstances, such as tax changes like those announced in this year’s federal budget.
“For instance, what happens to their ability to service debt if interest rates rise? What happens if a property remains untenanted for an extended period? How will the changes to the depreciation rules affect cash flow?”
For those with heavily geared properties, Mr Hutton recommended investors should have multiple cash flow options to mitigate any changed circumstances.
“History tells us that the story of property crashes, large and small, is always much the same. It’s not a reduction in value of property or a downturn of property sales or construction that causes investors to lose assets. These are simply influences or by-products,” he said.
“The reason people lose their property portfolio is usually an inability to service debt, resulting in them losing control of their properties.
“Investors who can hang on in the rough times almost always come out smiling when conditions bounce back again.”
In order to survive those rough times, Mr Hutton said investors need to know the difference between cash flow (the net amount of cash flowing in and out), paper wealth (total wealth with a monetary value) and expected income (the estimated amount of income received).
“For many residential property investors, understanding cash flow and making sure that debt can be serviced throughout any property downturn and interest rate increases, is likely to be the difference between financial success and failure over the longer term,” Mr Hutton said.
“The current outlook also suggests it is not the time for investors to be overstretching themselves.”
Property
Do Aussies have an overweight exposure to property?
Aussies have an overweight exposure to property assets, increasing their risk to higher interest rates, an expert has warned. ...Read more
Property
Queensland is still the destination of choice for first home buyers
New data suggests that Queensland remains a sanctuary for first home buyers, while NSW and Victoria continue to fall short. ...Read more
Property
Are NFTs the answer to fractional property investing’s biggest problems?
Could NFTs be the answer to solve the questions holding back fractional property advocates? ...Read more
Property
Even experts agree that Australia’s property market doesn’t make sense anymore
The last 18 months haven’t just broken records for price growth, they’ve broken the rules for how Australia’s property market usually operates. ...Read more
Property
In a position to buy a €1 European villa? You might be better off looking local instead
So, you want to buy a €1 European villa? Here’s what you need to think about before you do. ...Read more
Property
Will the regional shift take pressures off property prices?
The COVID-19-induced regional exodus is spurring on new economic markets further away from the cities, while potentially alleviating congestion and housing affordability issues that Australia’s capi...Read more
Property
What you should know before you buy a €1 European villa
A €1 European villa might sound like a good investment to Millennials. Here’s why they should think twice. ...Read more
Property
Tale of 2 cities as lockdowns threaten to slow property growth
Despite Australia’s two largest cities acting in polar opposite directions, the overall housing market remains strong, an economist has revealed. ...Read more
What to expect as the end of lockdown looms? Will the Stage 2 tax cuts boost your tax return? Where should investors be looking as the economy reopens?
Listen now
Could property prices inflate by another 20%? What’s happening in recent dividend announcements? Did your fund fail the YFYS test?
Listen now
What does the NSW regional permit mean for property investors? Who really wins from the BHP-Woodside merger?
Listen now
The sea and tree-change norm; Square’s acquisition of Afterpay; Why you should think twice before turning to TikTok for advice
Listen now
Property
Do Aussies have an overweight exposure to property?
Aussies have an overweight exposure to property assets, increasing their risk to higher interest rates, an expert has warned. ...Read more
Property
Queensland is still the destination of choice for first home buyers
New data suggests that Queensland remains a sanctuary for first home buyers, while NSW and Victoria continue to fall short. ...Read more
Property
Are NFTs the answer to fractional property investing’s biggest problems?
Could NFTs be the answer to solve the questions holding back fractional property advocates? ...Read more
Property
Even experts agree that Australia’s property market doesn’t make sense anymore
The last 18 months haven’t just broken records for price growth, they’ve broken the rules for how Australia’s property market usually operates. ...Read more
Property
In a position to buy a €1 European villa? You might be better off looking local instead
So, you want to buy a €1 European villa? Here’s what you need to think about before you do. ...Read more
Property
Will the regional shift take pressures off property prices?
The COVID-19-induced regional exodus is spurring on new economic markets further away from the cities, while potentially alleviating congestion and housing affordability issues that Australia’s capi...Read more
Property
What you should know before you buy a €1 European villa
A €1 European villa might sound like a good investment to Millennials. Here’s why they should think twice. ...Read more
Property
Tale of 2 cities as lockdowns threaten to slow property growth
Despite Australia’s two largest cities acting in polar opposite directions, the overall housing market remains strong, an economist has revealed. ...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
