RBA Asks Property Investors to Use Prudence
The Australian housing market has managed to keep both the ‘investor’ and the ‘speculator’ within us engaged. It has rallied really well in the last couple of years and Sydney in particular has bucked every former trend and broken all the high walls of growth.
Use prudence before going big on property purchase
RBA governor Glenn Stevens however suggests that a bit of circumspection is necessary before going full throttle in what’s clearly a buoyant market. Sydney has witnessed infectious borrowing in recent months and this has got to do with strong consumer sentiment and positive stats. Measured against the GFC, the credit approvals are a good 130% higher in 2014.
High loan-to-value ratio for investors
While the banks still show a degree of caution while lending to first home buyers and owner-occupiers, the loan-to-value ratio has shot to unprecedented levels for the investor segment. Banks and other lending institutions are perhaps getting carried away by the momentum that the Sydney market presently has.
Sydney may not grow at present rate
Mr. Stevens maintains that Sydney won’t flatter to deceive, it is well past that stage now but at the same time, the market can’t keep growing at its present rate without threatening sustainability. Keeping this in mind, buyers and property investors should budget for the plateaus and the downward slopes ahead.
Credit outstanding will never get close to times of GFC, feels Mr. Stevens
Banks, feels Mr. Stevens, should also keep a buffer in place; what with interest rates expected to rise in a year’s time. At least, there should not be a case when the mortgage defaults owing to upswinging interest rate (sometime in 2015) presents a GFC like situation. This said, Mr. Stevens believes that credit outstanding won’t come anywhere close to such precarious figures as 2008 had presented.
If you are contemplating buying a home in Sydney’s eastern suburbs, you can get in touch with a seasoned buyer’s agent so that you don’t have to pay too much like some over-eager property investors. You can get in touch with me. I will be glad to assist.
