Are you waiting for a sign that the property market has turned?
Well, I have 5 for you.
If you thing about it most investors, economists, pessimists or otherwise, are keen to tip the turn of the market.
Especially when that turn is upwards!
It is almost like they are waiting for a bell to ring or there to be no grey skies or headwinds – they’re waiting for perfect time to enter the property market.
In reality, there is never be a perfect time as there will always be something to deter people from taking the next steps.
But considering a number of recent events, it looks like there has been a complete reset of our property markets.
Here are 5 reasons we have turned the corner and the property markets are on the up.
- Home Buyers Leading the Charge
Currently there is a record number of Home Buyers in the market.
While some investors are trying to be smart and time the market and others are having difficulty obtaining finance, if you have a stable job and a secure income, there has arguably not been as good a time as this fore almost a decade to buy a home.
First home buyers are now at their highest numbers in more than a decade, having been encouraged by low interest rates and government incentives.
First Home Buyers are in integral piece of the puzzle as many take the entry level homes in our inner and middle ring that allow existing owners to upgrade to the next level and they do the same for another round of existing home owners.
We are also seeing a record number of existing owner occupiers refinancing causing the number of new home loans to skyrocket in recent months.
While Sydney and Brisbane have led the charge, Melbourne is also expected to follow suit as lockdowns and restriction have now been removed and our economy is moving again.
Now this is important, as homeowners are longer term thinkers that buy emotionally and this will hold our market in good stead for the next few years.
- Consumer Confidence Has Surged
Confidence is a critical factor for any major purchase, for an investment and in particular for our property markets.
The more confidence and certainty abounds, the more people are willing to make big decisions, like buying a home or investment property.
After a huge nosedive earlier this year, consumer confidence is back to record highs not seen since November 2013.
Interestingly, this also falls in line with our recent Metropole Sentiment Survey of more than 1,500 property investors, right around Australia.
When surveyed, 74% believed it was a great time to invest in property, well above the numbers from the last 3 years.
I only see this figure staying strong with lockdowns easing and borders re opening, as life returns to some sense of normality.
- Positive Growth in Our Capital Cities
For the first time in a long time, we have positive growth around the nation for property prices over the last month.
For a long time, we saw continual negative monthly growth as we faced lockdowns and our housing markets ground to a halt.
But in November we saw all capital cities fall into positive territory for the first time in years.
This could be a sign of things to come, we have moved off the bottom and are beginning to head in the right direction.
This could be the sign investors are looking for!
- Credit to Loosen
After more than a decade of credit tightening and overly restrictive lending rules, something has finally given and it may be the game changer.
Changes to “responsible lending” will speed up the lending process and provide more flexibility and understanding when assessing household expenditure.
This may increase some people’s borrowing capacity by up to 20%.
The more flexible lending rules are to be implemented from 1st March, 2021 according to Treasurer Josh Frydenburg.
With only 21% of property buyers currently in the market made up of Investors, this shapes as a turning point for them to re-enter the market, particularly if general conditions continue to improve.
This means currently there is a window of opportunity to get into the market before more investors join the record number of home buyers searching for a property in 2021.
All driven by cheaper interest rates and easier access to credit and an improving economy
- Loan Deferrals Falling
I know the potential mortgage default cliff was a huge concern for the property pessimists out there.
Particularly, when at its peak more than 10% of all loan repayments were deferred.
They were concerned that people would lose their jobs and be unable to pay their mortgage or their rent and the flow on effect would be a disaster for our markets.
In reality though, it has been a very different story, with many Aussies kept in work with Jobkeeper payments and other stimulus measures.
The banks also were willing to work with borrowers holders and have provided favourable terms until they were able to return to paying their loan again.
Deferrals are now approaching 3% and at those lower, more manageable levels the mortgage crisis has been averted.
While homebuyers continue to dive into our property markets, investors are yet to enter the market en mass - some are still waiting for the perfect time to enter
Home Buyers are generally more longer-term focussed and will provide a level of confidence and certainty to our markets.
In fact homeowners have always created our property markets (making up 70% of purchasers) with investors creating the cyclical swings of booms and busts
If you’ve been one of those waiting, you’ve missed the turning point – I’ve just shown you five reasons why a property markets are on the rise again, but it’s not too late to get in the market.
There is a window of opportunity to take advantage of the property market reset over the next few months
Now is the time to take action and prepare to strike, before you see it in the news headlines!
Brett Warren is a director of Metropole Properties in Brisbane and uses his 18 plus years property investment experience and economics education to advise clients how to build their portfolios.
He is a regular commentator for Michael Yardney's Property Update.
Disclaimer: while due care is taken, the viewpoints expressed by contributors do not necessarily reflect the opinions of Your Investment Property.