Has the Sydney market killed the property investor?
APRA (Australian Prudential Regulation Authority) has been trying to curb the skyrocketing Sydney market, however it is going to take some time to catch this wild horse. Read about this recent $70 million sale in Sydney
The main action that APRA has undertaken is to restrict lending for investors, in the belief that this will slow down the market. Investor lending has been on the increase for many years now and it is believed that investors are pushing first home owners and other owner occupiers out of the market. However, more gen Y'ers are opting to buy an investment property first, while they are renting or living at home. This means that the line between investors and first home buyers is becoming blurred, so the statistics may not be all that they seem.
APRA has limited the percentage of investment loans that banks are allowed to have on their books. So banks have responded by various actions, such as increasing LVR on new loans and increasing interest rates on existing loans. Each bank varies in its policies and these keep changing on a daily basis, keeping this mortgage broker on her toes!
However, it' not all doom and gloom for investors....There are a number of non-bank lenders that are NOT regulated by APRA who are stepping up to the mark, happy to provide lending for investors.
If are looking to purchase an investment property, don't let the hot Sydney market put a dampener on your plans. Yes the prices are crazy and yes, it's probably not the best time to buy in Sydney. With the media bombarding us with news of the Sydney market, it is easy to forget that there are other property markets all over Australia. These other markets are at various stages of the property cycle, providing many different opportunities for savvy investors.
According to many experienced property investors, the optimum time to purchase is at the 'Start of Recovery' or 'Rising Market' phases. There are many areas around Australia that fall into this category. Of course due diligence needs to be done, and other factors considered, such as rental vacancy rates, rental yield, demographics, infrastructure and employment opportunities. As an example, a quick online search uncovered this dual income property in regional Orange in the low $400k's
When you go searching for your next property, go with the confidence of knowing just how much you can borrow. Despite what the media says, lending for investors is still possible, but it is a matter of finding the right lender for your circumstances. Allow me to assist you in this process.