Rays of light for Aussie real estate investors as stimulus stacks up

Property investors have endured sinking prices, tough bank lending rules and the spectre of new taxes. But things are finally looking up. COMPARE INVESTMENT HOME LOANS

Fortune is shining on real estate investors again after a tough couple of years.

A property price turnaround is one of several factors likely to encourage real estate investors in the next six months.

As new data suggests the national property downturn looks set to bottom out soon, 2020 may be the first year of across-the-board house price growth in state capital cities since 2013.

However, many property investors will still find financing difficult.

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Realestate.com.au chief economist Nerida Conisbee says investors will still find it tough to borrow.

Metropole Property Strategists CEO Michael Yardney said house prices might fall for the next couple of months but should be flat or higher by December, with 3-5 per cent growth tipped for most capitals next year.

He said housing market momentum was benefiting from:

• Increased investor confidence after the Coalition’s election win stopped Labor’s new taxes.

• Two interest rate cuts in two months.

• Tax cuts set to flow to households from this month.

• Banks no longer need to assess home loan applications using a minimum interest rate of 7 per cent to determine a borrower’s ability to service the loan.

• Regulators to ease banks’ assessment criteria from August.

• First home buyers returning to the market and buoyed by government incentives.

“Prices are not going to boom any time soon, but the property pessimists who forecast significant falls in property values will again be proven wrong,” Mr Yardney said.

“While interest rates have fallen to historic lows and mortgages may be more affordable, many investors will still have difficulty borrowing funds to invest because of the bank’s stricter lending criteria, including more careful scrutiny of personal expenditure.”

Realestate.com.au chief economist Nerida Conisbee said access to finance for investors was improving, but was still tough.

“If you are looking to buy, make sure you have pre-approval in order,” she said.

Ms Conisbee said it appeared that Australia’s two biggest housing markets, Sydney and Melbourne, were starting to turn around.

“Things are very different to where they were a couple of months ago,” she said.

“The Coalition’s win means tax incentives are still there, we’ve had a couple of rate cuts and there’s tax cut stimulus.”

The latest CoreLogic figures show annual house price falls of more than 9 per cent in Sydney, Melbourne, Perth and Darwin for the 2018-19 financial year.

Brisbane was down 2.6 per cent and Adelaide dropped 0.3 per cent, while Hobart rose 2.9 per cent and Canberra 1.4 per cent.

CoreLogic head of research Tim Lawless said data for the past month suggested the downturn was running out of steam.

“The improvement in housing market conditions over the first five months of the year has largely been organic, however since mid-May there has been a raft of announcements that should provide a further positive flow through to housing demand,” he said.

@keanemoney