Inside Property
Better In the Market Than Out
Events
in the international financial arena this past week have left more than a few
of us feeling nervous about the stability of our own economy. The key issue is
the access to liquidity of money which has all but vanished since this time
last year. The events in the U.S have decimated the market share of the smaller
funding institutions, with low doc lending approvals virtually non existent. In
the property arena this is a double edged sword. As the banks tighten their lending
practices it’s harder for buyers to get loans, so it can be more difficult for
sellers to achieve a sale. Many builders, for example, are traditionally low
doc borrowers, so there is instantly a shortage of new projects on the table
being approved. This is adding to the chorus of opinion that we are heading for
a supply shortage of housing across S.E QLD. The age old rule of supply and
demand therefore points to price growth. We forecast price growth and rental
returns both on the rise into 2009. The federal government last week announced
a timely support package which will put some much needed competition into the
mortgage market. It’s a clever decision which will hopefully provide a boost
for our property markets – as well as relief for those suffering mortgage
stress. With interest rates looking as though they will continue to come down,
it’s a great time to purchase property. Prices are currently at realistic
levels – it is far better to be in the market enjoying the coming rise than to
be ‘waiting for the bottom’. The market itself can move extremely swiftly,
there are some fantastic opportunities available so it’s definitely time to get
in and beat the rush of battered investors fleeing the uncertainty of Wall
Street.
Til Next Week,
Olivier