half year property analysis

Half Yearly Property Analysis: January – June 2019

It’s been an eventful start to 2019 for the property sector. With the findings of the royal commission handed down, a surprise result in the federal election and interest rates cut to historic lows, what else can we expect in 2019?

After months of uncertainty, it appears property owners and investors can finally let out a collective sigh of relief. In the midst of a property downturn, the first half of 2019 will be remembered by many as one of the more uncertain periods in Australian property. Let’s look back over the last six months to see what’s happened already in 2019.

Reviewing the Last Six Months in Property

Hayne Royal Commission

The findings handed down by the Hayne Royal Commission in February, investigating misconduct in the banking, superannuation, and financial services industry, were expected to impact lending and credit availability. While a number of recommendations were made in relation to the remuneration of mortgage brokers, the government is taking a slow and steady approach to this issue, which has restored confidence and calmed the market.

Federal Election

Similarly, the return of the Liberal/National coalition government at the May federal election ended industry-wide concerns about changes to negative gearing proposed by the opposition Labor party. Investor uncertainty, coupled with APRA restrictions on lending, slowed property sales in the first half of the year. With investor confidence increasing and APRA rolling back their restrictions, the market is finally showing signs of recovery.

Record Low Interest Rates

After keeping rates on hold for nearly three years, the Reserve Bank finally cut interest rates in June to a historic low of 1.25%, with further cuts expected in the future. Aiming to support employment growth and move towards the inflation target range, it’s the first cut in borrowing costs since August 2016. It’s expected that lower interest rates will attract more borrowers and investors to the property market, setting the stage for market recovery into 2020.

 

What’s Next for Property Investors in 2019?

Improved lending conditions

The roll back of lending restrictions by APRA, paired with lower interest rates, means lending conditions are improving for investors. With financial institutions still reeling from the revelations of the Hayne Royal Commission, banks are becoming more competitive, offering increasingly attractive packages for investors. As the market improves, take advantage of these favourable conditions to add to your property portfolio.

No changes to Negative gearing

The changes to negative gearing, proposed by the Labor party during the election campaign, are no longer an issue for investors. While these changes were going to be grandfathered and would not have immediately affected current investors, it was expected these changes would slow the market and potentially derail recovery. For the moment, negative gearing stays the same, providing much-needed certainty to investors.

Government stability

The returned Morrison coalition government has promised steady stewardship of the economy, taking a “steady as she goes” approach. With no big changes planned for the economy, property owners and investors can move forward with more confidence in the post-election period. With signs the property market is on the verge of recovery, government stability is good news for property owners and investors.

Strengthened property market

There are signs the property market is beginning to bottom out, indicating recovery is around the corner.  The signs are positive – interest rates are at their lowest point in history, lending conditions are improving for investors and markets are beginning to rally across the country. With no new restrictions imposed following the Hayne Royal Commission and the rolling back of APRA regulations, it’s time for investors to consider re-entering the market.

Time to move forward

After the downturn of the last 18 months (and the uncertainty of the last 6), it’s time for property investors to move forward. Conditions are set to improve, which means it’s time to review your property portfolio and position yourself to make the most of the forecast recovery in the market. Take advantage of the more favourable conditions and set yourself up for success into 2020 and beyond.

 

 

Are you ready to take advantage of the improved conditions forecast for the remainder of 2019? Contact Vision Property & Finance to discover how we can help you make the most of the current property market. Give us a call on 02 8354 3000 to reach Sydney’s office or 02 4014 1999 to talk to someone in Newcastle’s office. You can also contact us here.

 

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