Greg Hoffman Checking exposure to property
In view of the warning signs, now is the time for investors to check their exposure to property
Irecently had lunch with a mortgage broker of some 10 years’ standing. Lately she’s been contemplating giving the game away. “The banks just aren’t approving anything,” she lamented. If you’ve applied for a loan lately, or spoken to someone who has, you’ll probably know what she means. The banks have been tightening their credit standards and this has limited the amount many buyers can borrow and, therefore, pay for properties.
Sellers still accustomed to more buoyant times have been reluctant to reduce their offering prices to meet restricted borrowers. The result has been a sharp decline in the volume of properties changing hands. And, in some key markets like Sydney, prices have been falling.
The situation could go a number of ways from here, so I’d like to handicap those scenarios, as I see them, and touch on various stocks that are likely to be affected.
Check the odds
First, let’s consider the most optimistic scenario: that property prices and volumes roar back. Perhaps credit is loosened up in some way and the Reserve Bank lowers