According to Mike Harvey, the founder of On Your Side Investments, the property market is overdue for a shake-up. However, he argues the shake-up won’t come in the form of a burst housing bubble.
“It’s clear the onus on banks to verify income and expenses is going to slow the process down and make it more onerous for buyers wanting to get a loan,” Mr Harvey said.
“The downside is the extra costs to banks are likely to be passed on in the form of higher interest rates.”
He said tighter servicing requirements will trigger fewer loans and fewer properties being built.
“Funnily enough, that will have a counterproductive role in the housing affordability crisis as with our strong population growth; demand will increase, leaving only one way for rents and house prices to go,” Mr Harvey said.
As such, previously overlooked cities could be in for housing booms, with younger buyers leading the way.
Mr Harvey said the sector is already seeing an exodus of home-owners selling in Melbourne and Sydney and buying in Brisbane where prices are generally cheaper and the lifestyle generally better.
“There’s an increase in demand for Brisbane properties much like there was for Sydney and Melbourne before their boom phase, so we can fully expect a 40 per cent to 70 per cent increase in Brisbane house prices over the next three to four years as Brisbane does what Brisbane always does,” he said.
“While cities like Melbourne and Sydney are always going to be good places to invest because of their sheer size, population, infrastructure, business hubs and tourism, other cities are now starting to gain momentum as a result of external factors such as the royal commission.”
Mr Harvey added that Sydney and Melbourne are also in for possible growth spurts over the next two years as the softened markets stabilise.
Continuing, however, he told home buyers to “hold onto your hats”.
“For those who can afford to get in and pass the bank servicing requirements, I encourage to look very closely and then act if you can,” Mr Harvey said.