Should I put investing in property on hold?
With the Reserve Bank of Australia (RBA) opting to raise the cash rate by 25 basis points to 3.85 per cent, and financial institutions tightening up on lending criteria, some may be wondering whether to put their property investment plans on hold.
But let’s not look at this current cycle entirely through the economic lens… there are some very positive reasons as to why investing in property is a good time right now.
Housing is in short supply, and there is a very high demand for rental properties; our vacancy rates are very low, meaning investors who use us to manage their property generally have a regular income and use property to work towards their financial goals.
With its relaxed lifestyle, vibrant city centre, university, and proximity to Sydney, Newcastle and the Hunter Valley is a desirable place to live; indeed according to this news report, Lake Macquarie, has been ranked by the Regional Australia Institute as the number one town in NSW for people moving out of the city and the fourth most desirable locality nationally.
We believe there is never a right or wrong time to invest in property – but we do believe you must do some homework to see if you’re actually in a financial position to do so.
So let’s revisit some fundamentals before you decide.
Review your finances
Knowing what is coming in and what is going out, and most importantly, what is left over at the end of the month is essential.
If you are in a stable and reasonably good paying job/self-employment income, and have a solid employment history, the chances are you can borrow money.
Know your borrowing power
While banks have tightened up on lending criteria, they are still competing for business; some report new loan applications have declined and there is an increase in people switching lenders on their home loan for a better deal.
The mainstream lenders such as banks have standard criteria you have to reach, so look beyond the main financial lending houses. There are financial lenders willing to give mortgages to those who are self-employed or whose circumstances don’t quite fit the bank lender’s tick the box.
If you already have a property, and there is equity in the property, lenders may also look at you more favourably. A good mortgage broker may be able to help with your finance research, as they often have access to other reputable lending institutions.
Be realistic
Know the risks, and don’t overstretch yourself. The main risks you’ll need to factor into your budgeting are:
- Further interest rate rises
- Unexpected job loss, or other changes in financial situation, such as unpaid maternity leave
No-one has a crystal ball and there is always uncertainty happening in the economy, and property market; the most important thing to remember property has always been a long-term investment.
Unlike other forms of investment, property usually survives economic rough times and many consider it a low-risk investment for potentially high returns.
We do more than simply manage and sell properties; we try to give you information to help you make informed decisions when planning for the future. We’ve helped thousands of people realise their financial goals through property, and we’d like you to be one of them.
Get in touch with us to find out how our property management services can make your life easier.
Drop into the Cardiff office or give us a call on 02 4956 9777. Or send us an email at mail@newcastlepropertymanagement.com.au – we’ve helped many people realise their financial dreams through property and we’re keen to help you.
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