Chasing northern exposure
INVESTORS are returning to the property market in Geelong’s northern suburbs after the financial regulator lifted a cap on interest-only lending.
The cap on the amount banks could lend via interestonly loans was introduced to cut the influence of investors in rising markets, particularly Melbourne and Sydney.
But as the capital city markets declined in 2018, the Australian Prudential Regulation Authority (APRA) lifted the cap in December.
Harcourts, North Geelong agent Joe Grgic said there had since been a steady increase in the level of inquiry, particularly from Melbourne and Sydney investors keen to get into the Geelong market with an eye on entry-level-priced properties with a bigger land component.
The lower purchase price and interest-only terms meant investors could secure neutrally geared properties where the rent paid the bills.
Bigger sites of 600sq m or more offered redevelopment potential, though most investors were happy to bank the capital growth.
“I wouldn’t say the floodgates had opened but there certainly has been more inquiry,” Mr Grgic said.
“For them it’s a property to buy and hold and, on average, in 10 years it will double (in value). If they maintain the property, there’s a good margin at the end when they sell.”
CoreLogic data shows more than 50 sales were recorded in Geelong’s north this year.
Corio, North Geelong and Norlane have been among the region’s best-performing housing markets, with annual capital growth of 15-25 per cent.