2022 is here! There are so many things happening around the world that are out of our control that it is hard to say when is a good time or bad. However if you are buying property, you should be taking a long term view anyway. I keep me ear to the ground when it comes to lender economists giving their opinions however they have been known to be wrong on the regular so here are some things that you can take into consideration.

Stock Levels

If you are living in a capital city and have been trying to buy property, I am sure you agree that stock levels are an issue. I know quite a number of real estate agents across the country who all cry poor when it comes to stock. However we currently have a chicken and egg scenario. Vendors are scared to sell because they are worried about jumping into a market with such hype and pent up demand, they are concerned about not being able to find a property they want so they second guess the risk of selling.

Thats one side of the coin however this is a part of a problem that adds to the lack of stock in our major capital cities. I speak to home buyers every day who tell me they see an ad go up for a property and by the time they connect with the agent, the property is under contract.

Demand

The demand is there ‘for weeks’, however the stock is lacking (as discussed above). The state governments will harp on about this as well, their solution is to build more housing in new estate however that is not generally where the pent up demand is. People in cities generally want to be close to Schools, Jobs, CBDs, transport and hospitals. New estates usually lack all or some of these necessities. I would say that property is a safe long term bet but don’t listen to this mortgage broker. Look at the data yourself and make the call.

Let’s use Melbourne as an example. Prior to Covid is was a constant member of the Top 10 most liveable cities in the world (6 lockdowns will kill that). Sydney is always had the illustrious title of the largest city in Australia but it is about to be overtaken by Melbourne. Melbourne is home to 8 universities that teach over 300,000 students who have mostly been locked out during the pandemic. As border restrictions ease and this population returns, the demand for properties will increase significantly, which will bring investors back looking for rental yields.

Low Rates

Money is still cheap! I have a long enough memory to remember 8% interest rates (post GFC 2008). The banks are now in a race to 3% it seems, however this is still cheap money. When you consider the returns we have seen in the past two years and you consider the fundamental upsides of economics 101 (supply and demand).

Once the international/interstate tourists, business travellers return, even with the negative affects of inflation and increase in interest rates should definitely see the steam come out and hopefully a return to some form of normality. Economists are predicting a beginning of a new cycle, a resetting if you will and a flattening of the growth curve. Click here to run a report on your potential scenario and our team will be in touch.

Negative Gearing

We are in an election year but Labor is not going to make the same mistake twice, last time they put negative gearing changes on the table they were obliterated at the last election. If you are an investor, you rest assured that your accountant is not going to be calling you to tell you about the govt making any drastic changes that are going to affect your bottom line.

Government Grants (for first home buyers)

FHLDS: There are over 4,000 slots left, if you are a first home buyer with a small deposit, this is the scheme for you. 5% down and Scomo and the govt will stand guarantor for the remaining 15%. This avoids LMI and gets your feet onto the first step of the property ladder. In July of 2021 there were 10,000 slots so you need to be quick!

So the short answer is yes, now the next part is to get you into the right product and set up the correct structure to maximise your benefit, so reach out and let’s discuss your next move at startnow@sorenfinancial.com