A New Year’s Resolution for Property Investors

Posted by Luke Graham

Happy New Year and welcome to an all new decade!

If you’re anything like the team at Blue Wealth, the leftover ham is long gone, the hangovers dissipating, and the holiday waistline steadily burning away with a return to the gym. 2020 certainly began, quite literally, in a firestorm. Our thoughts are of course with the Australians who are suffering at the hands of perhaps our most fierce fire season on record.

2020 has undoubtedly started in an unconventional fashion, but an aura of hope prevails for those of us who are (or seek to become) property investors.

If we were to analyse this stage of the national property market cycle in the context of a flower, the market transformations of mid-2019 were the planting of the seed, the upsurge in sentiment and buyer activity that followed was the sprout and 2020 promises to be the blossoming. In the slightly more technical context of our property clock, we are at the stage of “opportunity” at the national level, with individual markets varying.

In a big part, this transformation can be attributed to an injection of positivity into the market caused by four main factors:

A federal election upset which took changes to negative gearing and capital gains tax off the table.
Three cash rate drops with many lenders passing them on to mortgagees and offering more competitive mortgages to new customers.
A relaxing of the tight loan serviceability requirements implemented by APRA between 2015 and 2019.
A persistent period of low supply of new property, which tightened vacancy rates in many inner-city markets.

As a result, market activity in some places around the country began to skyrocket in the second half of 2019. With that activity came an upsurge in property prices. As this new year begins, it is very likely that:

You have a little more equity in your real estate assets than you had a year or so ago, and
That your ability to service a mortgage got stronger with both lower interest repayments and more favourable serviceability criteria.

With these things in mind, the 2020 New Year’s resolution of every current and potential property investor should be to ask yourself these questions (all of which you can discuss with your financial professionals):

Do I have the best and most appropriate mortgage for my current situation?
How does the equity look in my property and how will this year’s market activity impact that?
Am I in a position to invest in my next property ahead of stronger market conditions?

It might just be the case that 2020 brings more than you expected!

Posted by Luke Graham, on 7th Jan 2020