What’s really going on in the property market?
Is now the time to invest in another property?
Are property prices really about to fall 40%, as predicted by Channel Nine’s 60 Minutes, or is it just a lot of media hype?
What will the changes to negative gearing mean for investors?
It’s easy to become overwhelmed by the latest property market updates – especially because nobody seems to agree.
To cut through the confusion, we sat down with WhiteStar’s General Manager Adam Raphael for his take on the current market and opportunities:
The next 12 months are ripe for investment
Thinking of buying an investment property? The next 12 months could be just the time to take the leap. A report by KPMG predicts that, while the property market will continue to fall this year, prices will start growing again in 2020 for Melbourne and 2021 for Sydney. Of course there are regional areas continuing to do well regardless of Sydney and Melbourne.
“If 2019 is the year for prices to hit rock bottom, then now is the time to buy,” Adam says. “Imagine knowing you have another asset that potentially could clear your own mortgage in a few years’ time!”
While they haven’t generally been a great story with capital growth, apartments are often delivering excellent rental returns.
“We’ve found that, for the prices buyers paid, apartments in many cases are positively geared.” explains Adam. “This opens the door for longer term future growth without costing anything, especially because rental predictions are indicating that rentals will only go up.”
Lenders should start to ease up on restrictions.
The New Year brought in a major change for lenders: the Australian Prudential Regulation Authority (APRA) has removed the cap on Interest Only lending as of 1st January 2019.
What does this mean for investors?
“In theory, it means lenders should start to ease up on these restrictions for Loan to Value Ratio (LVR) and interest rates. How long this takes in reality is still to be seen,” Adam adds.
Negative Gearing and Capital Gains Tax changes are up in the air
What about Labour’s proposals to restrict some negative gearing concessions and to lift capital gains tax by 50%?
Adam says there’s no reason to panic yet. Here’s why:
a) There’s no guarantee that Labor will win
b) Even if they do win, they may not pass the changes
c) If they do pass the changes, it’s unclear when they would roll them out. It could be as late as July 2020.
Here’s what we do know: Labour’s housing tax plan includes a proposal to scrap negative gearing on new property purchases. But the policy would be “grandfathered”, meaning it will not apply to homes currently using the entitlement, and will not apply to newly built properties. (Read more on the plan here)
What does this mean for property investors?
“From what we know at this stage, it appears that nothing will change for existing property investors,” says Adam.
“But it’s the grandfathering provision that makes things really interesting for would-be investors. If you were thinking about investing, you may be wise to make your move soon so you can continue to benefit from negative gearing regardless.”
Over to you
Don’t let fear and confusion stop you from considering your next move in the property market.
If you want to get ahead and invest for your future, there may be little to gain by sitting on the sidelines. You might miss out on some incredible opportunities.
Take inspiration from what our happy clients say
“This is my second time I have asked WhiteStar for assistance with my finances. I wouldn’t have used them if the service wasn’t excellent the first time. My oldest son is also a client & they have gone beyond to assist him obtaining his goal of an investment property.”
Paul – Finance Client from VIC
Find out how you can get a new property for your retirement investment portfolio.