The recent interest the property market and housing finance sector has received from the media has left some people with concerns about where the market is heading, and what their property investment strategy should look like over the coming months and years.
Matt Ivers, co-founder of Vision Property & Finance, has had a ring-side seat to the current action going on in the real estate market and property finance industry. Starting out as a Mortgage Broker, Matt became one of the leading brokers specialising in property investment in the industry. Today, he advises people on their property investment strategy, and as part of his role has deep insights into Australia’s property market and mortgage industry that can help dispel some of the myths and legends currently circulating in the media.
Matt’s Inspiration for Working With Property Investors
Matt has been inspired to work in property investment advising, to help clients better plan their portfolio of investments, due to what he says is property’s emotional, as well as financial connection to people’s lives.
“Your home is often an extension and or reflection of who you are,” says Matt. “We all started our first life experiences in the family home, and when reflecting back, my fondest memories nearly always involve the family home.”
Unlike other kinds of investing, property investment is not only about good financial strategy.
“What I like most about property is, whether you live in a property you own or not, it’s a home for someone and it’s going to play a huge part in a person’s life.”
Property’s Strength as a Long-Term Investment Strategy
The real estate market is never the same for very long. Property experiences down, flat, and up moments – and as an investor you need to have a strategy that helps you to win at any stage of the cycle.
“For this reason,” says Matt, “I believe property as an asset class, has been a very stable and great performer in major centres around Australia.”
Matt says this is reflected in the way banks treat property; they have a high degree of willingness to lend against most of the value of a property, and, it is usually possible for property borrowers to receive the lowest interest rate of any type of lending the banks offer.
“The best part about this is, with a relatively low amount of savings, for example, $50,000, it is possible to acquire an investment worth approximately $400,000; an investment that is backed-up by a steady stream of income via any rent received.”
The Current Market Direction
Pundits have been forecasting the demise of Sydney and Melbourne’s buoyant real estate market for some time now, but it defiantly keeps rolling on, neatly side-stepping expert’s predictions of a perilous slide in values.
With recent changes to financial regulation around property-related lending instigated by the Australian Prudential Regulation Authority, there is an expectation of a gradual cooling, which Matt suggests is timely.
“I think that Melbourne and Sydney are over-heated at the moment, driven in particular by the record low-interest rates we are seeing at this time. It’s clear the banking regulator, APRA, feels the same way, and it is trying to cool the market down, but, at this stage, the changes have only had a minor effect.”
Continuing Strength in Sydney
Sydney is one market holding-up against expectations of a slide. There are underlying reasons for its continuing strong performance.
“Sydney’s property market, in particular, seems to have an undersupply of existing stock,” says Matt, “and its strong economy has led to house prices growth that is not sustainable, especially considering wage growth is basically non-existent at the moment”
What is Around the Corner for the Sydney Market?
Matt says it’s like Back-to-the-Future for the Sydney property market, with so much of what is happening today reminding him of the early 2000’s in the Olympic City after the games.
“Sydney today, reminds me of back in 2003 and after years of high growth what followed was, nearly a decade of low to no growth. Having said that though, I did think this was the last year of growth like we’ve seen it; however higher prices continued even after a minor stall leading up to the election. So maybe it’s still 2002 (we’re comparing it against).”
The End is Nigh…Kind of, Sort of…Maybe Not! Predicting the Peak is Fraught with Danger
For most of the 2016/17 Financial Year experts have been issuing warnings about the property market. The IMF, the Bank for International Settlements, and more recently the World Bank have all been urging caution. However, while predictions of the end to a growing market are in plentiful supply, on the ground there is seemingly no end.
Matt expects there will be a post-growth cycle cooling, and he welcomes the strong support of the regulator, but even his own expectations have been surpassed by this year’s property market growth. The risk for investors is that an early exit will leave money on the table. The end of a long run in rising prices is notoriously difficult to predict.
“It’s very difficult to predict the exact timing of the end of a boom, especially given it’s more emotionally than financially driven. It’s definitely far easier to predict the start of a growth cycle!”
This is where Matt’s expertise can really make a difference to a client’s property investment outcomes. He has accrued a vast amount of knowledge about the market and can advise clients on good investment strategy at any stage of the property cycle.
Are you considering investing in property?
Or would you like an obligation-free Property Investment Health Check to see how your assets are performing? Call 1800 004 663 or contact us today to speak with one of our expert advisors. Or visit Vision Property & Finance to check out our industry-leading property programs.