<img height="1" width="1" style="display:none" src="https://www.facebook.com/tr?id=794593617346134&amp;ev=PageView&amp;noscript=1">

Collins Home Loans Blog

Where do investors sit in the Housing Affordability debate?

Posted by Rob Emmett on May 2, 2017 4:37:27 PM

pexels-photo-110469-975396-edited.jpeg

Housing affordability is a hot topic in Federal and State government circles at the moment with several State governments making moves to assist homebuyers with a suite of measures and the Federal government likley to release a major housing affordability package in next week's Federal budget. The Victorian government recently announced relief for First Home Buyers and the NSW premier, Gladys Berejiklian has declared housing affordability the next "big issue". 

For property investors, this is a confusing time. Yes, we all aspire for housing to be more affordable for first home buyers and the young, but at what cost for investors?  Have investors become the new bogeyman of housing policy?

And now, tougher new regulations announced by the Australian Prudential Regulation Authority (APRA) last month may have laid the pathway to pressure the government to tackle tax-related issues for property investors ahead of next week’s federal budget. Some of the key points from APRA include:-

  • For some time now (18 months) APRA has increased its scrutiny on investment lending in direct response to the recognised housing affordability issues in Sydney and Melbourne. In particular, this has been directed to a  clamp down on Interest-only mortgages.
  • New rules for the banks:
    • a new limit on higher-risk, interest-only lending to 30 per cent of all new residential mortgages
    • stricter controls on interest-only loans with deposits smaller than 20 per cent.

Ken Morrison in the Australian Financial Review, believes that the Federal Government will be best served by focusing on the backlog of undersupply. “The solution must be focused primarily on the supply of new dwellings...ignoring supply constraints while stoking demand will simply lift prices” he says.

He also makes the point that investors are being demonised in the housing affordability debate. “We also must understand the role investors play in the market. Investors have become the new bogeyman of housing policy. Yet new investment (including foreign investment) aids construction and boosts supply. New dwellings, no matter who they are built for, increase supply and take pressure off house prices and rents. They also provide jobs and help drive our economy.”

What does this mean for property investors?

Securing investment finance may have become a little harder in recent months and the jury is still out as to what next week’s federal budget will reveal – but this shouldn’t inhibit investors from continuing on with their investment strategy. As with most things, a tailored approach, that is specific to an individual client's needs, is vital when securing investment finance. For example, it might mean that as an investor, you will need to rework your existing portfolio in order to release equity for future purchases.

Niche lending solutions

APRA’s efforts to cap investor lending is limited only to the banks and as such there are still many niche loan products being offered by non-bank lenders and other institutions that are not subject to tightened lending policies. But these options are not as easy to find, which is why it is important to talk to a mortgage broker - as their in-box is flooded with new offers and deals on investment loans and they can quickly assess the best options available.

Keep informed

Despite there being conflicting opinions out there, the next few weeks will be critical with regards to any tax or regulation changes, so you are advised to keep well informed and follow the media. As an investor, it will also pay to be agile and be prepared to adjust your investment strategy to suit the circumstances of the day. Whilst the current climate has added some complexity to the property investment landscape, there will still be plenty of opportunities out there.

As a mortgage broker, Collins Home Loans is constantly in touch with the latest offers and in doing so can ensure our clients have access to the best possible deals and loan strcutures. If you would like to discuss your current investment potfolio or look at some up-to-date investment loan products, then feel free to contact one of our mortgage brokers.

IT'S NEVER TO SOON TO CHAT WITH A MORTGAGE BROKER

Talk to a Mortgage Broker TODAY!

 

Disclaimer: The information provided in this article is general in nature and is not intended as financial or investment advice and should not be relied on as such. You should always seek your own independent advice from qualified specialists as per your own specific circumstances.

Topics: property investment, housing affordability