Greg Hoffman Check­ing ex­po­sure to prop­erty

In view of the warn­ing signs, now is the time for in­vestors to check their ex­po­sure to prop­erty

Money Magazine Australia - - CONTENTS - STORY GREG HOFFMAN

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

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