A hot update on Australia’s warming property market (and what this means for you)
You will likely have seen the latest news about the Reserve Bank of Australia and its interest rate cuts. The steps taken to cut the official interest rates is going to have an impact on the property market and at MediPro, we want you to have the information you need to make informed decisions.
Let’s take a look at what we can expect to see:
A bit of history
In 2008 and 2011 there were rate cuts which allowed for a strong recovery in the Australian property market. Though it must be noted that the economic conditions in Australia are different from what they were when these changes took place. So, it’s unlikely that the recovery in the property market is going to be as significant.
What we can expect
The changes to the RBA interest rates means that housing is going to be more affordable; simply by its nature, an interest rate cute means that you’re on a lower rate. This means that more people have the capacity to enter the housing market.
Remember as well, since the Liberals have retained power, it means that there are not going to be any immediate changes to negative gearing or capital gains tax. What this means is that some people who were sitting on the sidelines and who were waiting to see how things played out can now enter the property market with some more confidence.
Top takeaway: There’s going to be a slow increase in the market – nothing like the huge upswing we saw in Sydney and Melbourne a few years ago. Despite this, property remains a positive investment opportunity for people looking to build on their financial future.
Borrowers under more scrutiny
We have spoken about this previously, but it remains a topic of interest and importance for buyers looking to enter the market: as a potential borrower, you are under a lot more scrutiny now than ever before. Things like the Royal Commission into Banking and Finance and the recent rate change have really had an impact on the lending industry, and borrowers are being examined for their credit-worthiness.
What this means for you is that if you are looking to buy a property, whether that’s at auction or via a private sale, you need to be more prepared than you had been previously. One of the ways in which MediPro can help you is with getting all of your documents ready for your application for finance. We can liaise with the banks on your behalf and will be here for you to support and manage your application for finance.
Harsher borrowing criteria means:
- Your living expenses will be assessed with limits places on lending to highly geared customers
- Expect a longer processing time due to an increased examination of financial documents
- Tighter overall limits on lending are being put in place
Top takeaway: Expect the borrowing process to be more complex than it has previously been – and for first-time purchasers, it’s important to be prepared with pre-approval to ensure that when you find the right home or investment property, that you are ready to go straight away.
The property market is set to gain momentum
While the property market is in a downturn currently, we do anticipate that confidence will regain slowly over time. While there were fewer properties on the market (which of course leads to a higher perceived clearance rate), there’s still a real recovery in place. This is of course spurred by the Coalition government staying in power, along with the changes to the interest rates from the RBA.
Experts advise that these changes are enough to make a real difference to the property market. So what does this mean for you as a buyer?
- Property is still a great investment, but it’s important that you are prepared when approaching a lender; you need to have plenty of time up your sleeve to be approved for finance, or you can seek pre-approval.
- The property market is expected to go through an upswing, and while this will happen slowly, it means that changes will be seen across the country.
- As a medical professional, doctor, or allied health professional, you are still privy to industry-specific rates and can take full advantage of MediPro’s services and support.
Make sure you’re at the forefront of these changes, don’t forget to be greedy when others are fearful (to quote the man himself, Mr Warren Buffet), and contact MediPro today to ensure that you have the best team on your side.