So I am reading a lot about the property market cooling in Melbourne and Sydney recently, and whilst I don’t disagree (in fact, statistics don’t often lie) I also feel that as we move into 2018 a few themes will dominate and opportunities prevail for the First Home Buyer and Owner Occupier. Property investors will continue to see pressure from APRA to deleverage or to at least slow down, a theme which dominated most of 2017. So this article isn’t so much for investors who have over leveraged themselves, something which will never end well. It is more for the Owner Occupiers and First Home Buyers as these markets will continue to offer significant opportunities going forward. So without further ado, here are some of the opportunities I think will present themselves in 2018:
1. Significant Equity in Own Home – establish a limit now!
Firstly, with values of homes still at historical highs, owner occupiers who have bought some time ago may now have significant equity in their home. So how can one take advantage of this? If your savings capacity is very good, it is very likely that your “serviceability” is also very good, and this can mean that it will be very easy to seek additional finance from a lender. This doesn’t have to be finance you draw straight away and start paying interest, but rather an available limit that you can access in future should there be a significant market correction or even if you spot an opportunity to purchase from a distressed buyer. There is no assessment done at the time you see such an opportunity, the assessment is done when you apply for the finance or limit – so if you have significant equity in your property (meaning a large difference between your home’s value and your loan/s against it) give our office a call or get in touch to see how we can help!
2. Upgrade your home
In a market which has risen significantly as it has over the last 5 years, many people who recently relocated to a lower value property could have significantly reduced their debts. For most owner occupiers, a fall in the value of their property doesn’t mean a loss in wealth though, this only happens if the property is sold. Something worth considering in a market which is cooling is one’s ability to upgrade and use the equity built up to move to a more expensive home. This could be a growing family considering renovating their existing property, and weighing up the cost (or ability) to do so against buying a new home. This is a tricky area and one where we are able to help. We have a number of solutions we can use so give us a call!
3. Look for Empty Nesting Opportunities
Significant changes to Aged Care strategies and touted legislation allowing empty nesters over age 65 to downsize and put money into superannuation from July 2018 means that there are and will be significant drivers to more larger properties coming onto the market in 2018. We have already seen a trend of this in 2017 but this theme will likely continue and gain traction over the next 12 months. This will mean more stock to choose from, and a higher supply of properties unless met with surging demand will see prices cool further in this market segment. The best way a First Home Buyer or an Upgrader to take advantage of this is to see a broker and get assessed and prepared, so that you can feel confident going to auction or negotiating with a vendor and agent.
4. Pay off your loan at historically low rates
If the market does cool and your equity shrinks, nothing has changed to your loan size but interest rates for owner occupiers are likely to remain at historical lows for some time according to most economists. Use this opportunity to pay down your loans, particularly focussing on getting that Loan to Value ratio down on your Owner Occupier debt.
5. Seek Advice!
Purchasing a property or seeking finance are huge decisions with equally large implications. First Home Buyers in particular should pre position themselves well before they have saved up a deposit so they know all of their options (some may not need a big deposit, and family guarantee loans can be a great fit for these clients). It is important that you have someone with the experience, knowledge, contacts and ethics to help navigate the landscape from negotiation through to settlement and beyond. We can help you with all aspects and ensure you are kept informed along the way. Pick up the phone and dial 03 9499 9412 or contact us today!