'Responsible lending' in the spotlight

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As industry economists predict that the nation’s combined property value will continue riding a low until at least mid-2019, a few positives have surfaced. In a hunt for the silver lining – found somewhere in the havoc of the credit crunch, tightened lending and property market declines – Peter Koulizos, Property Investment Professionals of Australia (PIPA) chairman and lecturer in property at UniSA Business, reveals how the softened property landscape can still be advantageous for some.

“Banks have gone too far and have negatively affected the property market in a big way”

“The loans that are currently being approved are rock solid in regard to the ability of the borrowers to pay them back. However, this comes at a cost. Less loans means less demand for housing which means nationally, property prices will continue to fall further,” Koulizos says.

“Banks call it ‘responsible lending’, but it needs to be realistic as well.”

Despite the market drop hindering current households that are managing debts and mortgages, it’s an opportune time for first-time home buyers and those looking for a bargain. Credit reforms, while bringing stress to those in need of financial assistance, are also helping direct Aussies back onto more solid ground, especially when seeking out loans in the future.

According to Koulizos, it’s not an entirely bad set of circumstances, considering that it means Aussies are reaching less often into money pools they don’t have – “especially if the credit cards were used for the impulse buying of depreciating assets”.

From a deeper industry perspective, the credit crunch also means that “the big four banks are losing market share”, influencing second-level lenders to step in.

Such increased competition in the market is considered by the PIPA chairman to be “great news, especially for when credit rules get back to a more normal base”.

But while acknowledging that new lending laws and stricter credit handouts are making Aussies more aware of and informed about their financial limits as well as reducing black marks against their credit ratings, Koulizos ultimately believes that “banks have gone too far, and have negatively affected the property market in a big way”.

“The reality is that the Australian banking institutions are already some of the best in the world. This is one of the reasons Australia wasn’t as badly affected by the GFC as some other countries,” Koulizos says.

In light of recent predictions that will see the market shift – forecast to start mid-year, they will hopefully help to ensure the nation maintains its strong economic footing during a time of global financial turbulence – Koulizos remains level-headed and optimistic.

“There are some positives and negatives in the property market at the moment,” he says.

“Investing in property is generally a long-term play, so investors need to take the good with the bad. It won’t be long before property prices turn around and increase again, and we can all breathe a sigh of relief.”

 

Top Suburbs : springwood , sth toowoomba , bendigo , leumeah , willoughby east

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