A double dose of positive news has been announced for the Melbourne property market that is likely to prove once again that timing the market can be costly. Last Friday Treasurer Frydenberg was vocal about proposing significant changes to responsible lender laws to make it easier for qualified borrowers to access credit. And last Sunday, Premier Andrews re-opened the Melbourne property market by allowing private inspections during stage 4 lockdown. I see both these positive announcements as “the calm before the storm”… let me explain…
As humans we tend to follow the herd. When bad news is hammered into us constantly, it creates fear in our minds – with many choosing to stand still and do nothing until the storm passes. The issue with this approach is that no one rings the bell when the market is at the bottom, or at the top. Time in the market – not timing the market – is the secret recipe to succeed with property.
I’ve been around the lending game for a long time and have seen first hand the costly mistakes made when property buyers attempt to time the market – it seldom works and it’s not a sound strategy.
Let’s take a look at the double dose of positive news just announced within the last week, which is sure to have a profound influence on the Melbourne property market…
First, the announcement by Treasurer Frydenberg is positive news across the entire home loan market…
Having been in the mortgage game for a long time, I have seen credit policy go from one extreme (too easy) to the other extreme (too hard). As it stands right now, a home loan application has similar qualities to a forensic investigation – it’s over the top (in my view).
If you’ve played the game of monopoly, you’ll know too well that cash is king. To win the game of monopoly, you have to be the last player standing – with cash remaining. In the real world – when it comes to property – credit is king in order to win and to survive in the game of property. Without credit flowing through to buyers, property transactions are crippled causing an adverse impact to property.
I have total respect for responsible lending and for compliance, however as the Treasurer said…“the burden of regulation has been increasing and with it has come more obstacles for the consumer making it harder for them to access credit”. Josh Frydenberg further stated… “The Morrison government is implementing the most significant reforms to Australia’s credit framework in a decade to increase the flow of credit to households and businesses, reduce red tape and strengthen protections for vulnerable consumers”.
Once these changes are implemented, I am confident that we will see more applications approved and much faster turnaround times – for qualified borrowers.
The motivation for the Morrison government here is to provide a sugar hit to our economy in light of a much needed economic recovery resultant from COVID-19, which has crippled our economy. Property will be the clear beneficiary from these significant changes.
Second, the announcement by the Victorian Premier Andrews is positive news across the Melbourne property market…
The Melbourne property market is usually buoyant during Spring as we see a much higher level of buyers and sellers transact during this time of year. The key reasons being the warmer weather, which brings people out from their home, and it’s the final quarter before the calender year comes to a close.
Given that Melbournians have been in stage 4 lockdown for sometime, we are obviously busting to get out and get on with our lives.
On Sunday just gone, Premier Daniel Andrews lifted the restriction on property, as real estate agents are now once again allowed to hold private inspections for residential sales and residential rental properties – in a COVID safe way. The 5 km bubble rule doesn’t apply, however Melbournians aren’t permitted to inspect regional Victorian properties – which is fine for the majority.
The lifting of restrictions is very positive news for vendors, buyers, landlords and tenants. Right now there is strong consensus amongst the Melbourne real estate community that the increased level of pent-up demand will have a profound influence on the Melbourne property market – and very quickly too.
Refer to the graph below which shows a significant jump in online search volumes since the announcement.
If you’ve been waiting to make your move, now may be a good time..!!
Remember, property is a long term proposition. If you take a long term view, then short term noise shouldn’t matter. No matter how bad the short term noise is – even if it’s a pandemic like COVID-19.
I don’t know what the percentage growth will be for Melbourne property, nor do I know the timing, but I am optimistic about our property markets and I feel very confident that your property (or properties) will continue to perform strongly over time. I say this with confidence as the fundamentals haven’t changed – population growth, short supply of stock, low interest rates… just to name a few.
Of course not all properties will perform the same, as some properties are in excess supply which may result in a decrease in value/price – high rise apartments are a good example of this.
The right advice is of utmost importance to ensure you don’t gamble with your property choices. If you need guidance or advice, please contact us as we have depth of experience which can be to your advantage.
The Information is general in nature and does not take into account your particular investment objectives or financial situation. It does not constitute, and should not be relied on as, financial or investment advice or recommendations (expressed or implied) and is not an invitation to take up securities or other financial products or services. No decision should be made on the basis of the information without first seeking expert financial advice. Your full financial needs and requirements would need to be assessed prior to any offer or acceptance of a loan product. Subject to lenders terms and conditions, fees and charges and eligibility criteria apply.