Should you wait to invest now?

Have you been wanting to invest in property but you’re feeling apprehensive given all the news of falling house prices? Or you might be holding off because you heard predictions of further property price falls.

Don’t let the noise and negativity get in the way of realising your property ownership goals. We explore why here.

What’s currently happening and why?

The latest property market data from CoreLogic shows a mixed bag of conditions across the nation.

In Sydney and Melbourne property prices are down 10.4% and 9.1% respectively over the last 12 months. But a number of cities are bucking the trend of lower prices.

Values have risen in Hobart (7.2%), Canberra (3.4%) and Adelaide (1.0%) over the past year. Some regional areas are also enjoying strong price gains including Ballarat (up 7.9%), Geelong (up 3.9%), and the Coffs Harbour region of New South Wales (up 3.9%)1.

Why are we seeing a fall in prices in some areas and mostly in the major cities?

The tightened lending environment which developed as a response to the banking Royal Commission, made the home loan application process more complex and time consuming. Many borrowers no longer qualify for the same sized loans they may have been able to secure 12 months prior, and a proportion have not been able to secure a loan altogether.

A reduction in foreign demand for property has also played a part in the drop in house prices, particularly in the nation’s largest capital cities, Sydney and Melbourne.

Looking ahead, proposed changes to negative gearing and capital gains tax concessions could put further downward pressure on property prices.

These factors and more, could see dwelling values fall further in 2019 and through to 2020. While this may paint a sobering picture of the future for some, property investors should see it as a great opportunity to buy.

The reality is, interest rates are low by historic standards, and lenders are actively competing for high-quality borrowers which means that if you’ve been getting financially fit in preparation for buying an investment property and you have the means to do so, there’s no better time than the present.

What are the advantages of a slow market?

A slow market gives you the luxury of time. Time is a valuable resource to have when you’re looking to make a significant financial decision. Time, along with research and expert advice will help you make the right decision.

You might still be thinking, why would you invest if there’s a chance that the property would drop in value? This comes back to investing in the right property, which is arguably just as important as investing at the right time.

For example, choosing the right location for your investment property. If you can find a property in a location with high demand, this can do most of the heavy lifting and you can feel more confident in your decision.

It’s also good to remember that the property market works in cycles, with highs and lows. Keep in mind that current conditions aren’t permanent.

How to invest and who can help?

Have you been paying off your home loan diligently over the last few years? If so, you may have built up some equity which you can use a line of credit to invest in property.

Watch our video on unlocking equity to invest for some more information. 

With media headlines shaking buyer confidence, it’s important to remember that investing in property is a long term game.

Speaking with your local Mortgage Choice broker can help you determine if you’re in the position to invest in property. They can assist with weighing up whether you’re in the right financial situation and discuss some of the options available to you.