A set of stronger housing indicators released by the ABS in April and the Reserve Bank’s decision to leave the cash rate unchanged at 2.75 percent at its June meeting is increasing market confidence and encouraging investors to proceed with caution when taking investment loans in the property market.
Latest ABS figures show the aggregate number of loans to owner occupiers in April 2013 for the purchase or construction of new homes was 17.9 percent higher than the same time last year and the result was driving improved sentiment in the property market.
Housing finance to investors rose 1.1 percent in April 2013 and the improvement in the market outlook combined with the lowest cash rate since 1959 is creating favourable conditions for investors to enter the market or expand their portfolio with an investment loan.
Peter Gianoli, General Manager Investor Assist, keeps a close eye on national trends in the property market in Australia, but notes WA has a unique environment which is often more resilient to factors impacting the rest of the nation when it comes to property investment loans.
‘Although there is speculation at present about a downturn in the resources sector, WA remains a buoyant state with strong employment and population growth,’ said Peter.
‘Nationally the increase in investor activity with regard to existing property is a positive sign and we are seeing this upturn flow through to investment in construction which is positive for the industry.’
Property investment loans require a lot of research and understanding. Peter believes the recent economic speculation and financial challenges witnessed around the globe are encouraging investors to make more educated investment decisions when taking out investment property loans.
‘In a boom or bust environment, people react and make knee-jerk decisions which only add fuel to the fire,’ he said.
‘However, over the past twelve months we have witnessed gradual growth across the property sector which is giving investors time to do their homework and we are finding they are carefully evaluating all potential outcomes and coming to the conclusion that now is a good time to invest,’ Peter continued.
‘There are always sound investment opportunities to be found in any market – the key is knowing where to find them. And if you don’t know, don’t be afraid to ask. That is the whole reason why businesses like ours exist.’
The next RBA Board meeting is scheduled for the 2 July 2013 and current forecasts are predicting the cash rate of the property market in Australia will remain unchanged for the second consecutive month, so if you are thinking about seeking a loan for investment property, keep your ear to the ground.