‘Double, double toil and trouble, fire burn and cauldron bubble’ (Macbeth, Act IV Scene 1). Similar to the famous opening scene of Act IV of Macbeth where we are exposed to a myriad of double meaning, contradiction and sense of an impending tragedy, is the property market currently heading for such doom? If the media is any guide, there appears to be an increasing number of soothsayers predicting a property crash and that it is nigh. But how realistic are such views?
Australia benefits from a strong banking sector with, generally speaking, robust lending practices. Banks have reduced loans with high loan to valuation ratios and interest only loans are down from their peak. The reduction of risk in this area is increasing financial stability allowing the banks to adjust their product offerings accordingly.
Pricing surges over recent times can be linked to historically low interests rates and the undersupply of housing. With the outlook for rate increases unlikely until 2018 and development approvals also peaking in 2018 pricing will not be impacted in the near short term.
The Reserve Bank of Australia (RBA) has recently hinted that more macro-prudential measures are on their way. These will likely impact investment loans. However, our view is that generalised price falls are unlikely until the RBA starts to raise interest rates, as to when that will occur …… I will leave such predication to you……..
Here at Wills Property, we leverage our unique skill sets to our client’s advantage. If you are interested in getting the best out of your property, whether it be through:
– Improved management;
– Selling; or
We look forward to your call…..
John Wills FAPI
M: +61 467 44 38 38
P: +61 2 9387 1700