As safe as houses
Questions always exist about the viability of the property market, but there’s no reason for investors to be concerned in 2017, writes GraemeMcDonald
Hello, everyone. By now you will be knee deep in the rst term, wondering when the chaos and madness will end. You will be looking at the booking schedule wondering how you will cover yet another round of swimming activities, school excursions and the like.
You’ll probably also be wondering just what you will do with the ever-growing pile of lost property that no-one ever seems to claim. The thought of the summer break memories are well in the past and business is now front of mind.
As always, there are things that are hitting the newspapers and reporting services that keep you wondering where the economy is heading. One of the big and almost weekly reports we see, and I have written about on a regular basis, is the property market. Headlines such as ‘Property market will continue to rise’, ‘First home buyers priced out of the market’ and, of course, the one that brings the most interest: ‘Property bubble set to burst’.
Let’s put some common sense behind all this. Is the property market rising? Yes. Is it likely to burst? Probably not. Will it slow down at some stage? Yes. Are some types of property better to buy than others? Yes.
Let’s be frank. Will property continue to rise in value? Yes. And, historically, it has for as long as records have existed. The only time it really goes backwards is when we have a major economic downturn – ala the GFC, when everything went pear shaped.
Houses in good areas with access to transport and services will always represent a good buy. Apartments and the like are a different thing. Most major capitals have a large number of these coming up for sale in the next year, and values are at best stagnant. Many of these are built to maximise the number in a building, and many banks have said they will not fund any of them that are less than 50 square metres. If you have ever looked at a 50sqm apartment, you’ve wondered why anyone would buy one in the rst place. The big concern is from a resale point of view; at best they are a short-term student accommodation option, in my opinion.
The other side of this story is that rent is going up again. This is true in some areas, and when you think about it logically, so it should. More people rent because they can’t afford to buy, with demand outstripping supply.
Just on the rising rents for apartments and the like – in major CBD centres there is a rising prevalence of Airbnb availability because landlords can make more in a day using this model than they can in a week with renting.
It probably won’t be the last time I cover this topic as it is a constant headline and talking point. In all cases, make sure you do your research to ensure you are clear in what you are buying when talking to your funder.
A good broker will be able to source and walk you through a number of scenarios that will t your circumstance. If you need assistance, feel free to contact me and I can get our resident property nance expert to walk you through the options.
Anyway, enough from me. If you would like to investigate anything raised today or discuss any other issue, give me a call.
The views expressed above are those of the writer and not those of the Publishers of this magazine. If you want to know more on this, or you have a suggestion for an article please feel free to email me on
firstname.lastname@example.org. The above information and/ or scenarios are for information purposes and should not be treated asspecic advice. Please refer to your accountant or nanci al advisor for information related to your own particular circumstances.
Graeme McDonald A member of the Money Resources Group