Margaret Lomas on investing in today’s changed environment
Margaret Lomas is one of Australia’s most recognised and respected Property Experts who is also the best selling author of 8 property investing books. Michael tuned into a webinar (August 18) to hear Margaret speak on “Investing in today’s changed environment”, a snippet from this event.
Margaret Lomas: Often the best time to invest is when everyone else is afraid to invest.
- You will often see headlines and newspapers commenting on the property market, however, we need to know more about what’s happening globally and at home to really get a better feel for what’s likely to come next.
- Overall the world economy is sitting at a reasonably comfortable place with no clear signs of another economic crisis.
- Australia is cautiously optimistic. Margaret Lomas: GDP growth rate remains one of the strongest in the world at 3.1% year on year and the forecast for the next quarter remains for it to be strong. Retail trade continues to firm and jobs growth is also robust. Signs are indicating that wages growth will accelerate. Westpac Bank is now forecasting the first rate rise in the cycle to be in 2020. Growth in labour income has increased to it’s highest rate since 2012, in line with solid growth in employment. Much of the strength in employment growth over recent years has been in the health and social assistance industry. Growing inward migration numbers contributing to population growth in key areas. Public investment has increased strongly over the year, supported by spending on transport and infrastructure.
Margaret Lomas: Housing prices have finally declined in Sydney and Melbourne.
- Family demographics has the most impact on property growth.
- Surge in demand from the 55-65 age group. They are downsizing and living in the property for up to 30 years. Growing pressure on smaller properties/smaller plots of land/villas/townhouses and to a lesser extent units in areas with plenty of transport options and services for older Australian’s. They are looking for properties (not retirement villages) with little upkeep but still feel like a house with good services and community centres close by.
- You must consider where the demand is coming from and assess the current lending conditions.
Margaret Lomas: NSW Property Market
- Sydney values fell 4.5% over the financial year, confined mainly to the premium market.
- Sydney’s high-end property will lend the falls and a potential further fall of 6%.
- Apartment prices should remain stable due to demand despite plenty of supply.
- Low-end property markets remain stable, with demand from first home buyers.
- Potential modest rises may start again in 2021.
- Margaret Lomas’s pick to buy property in NSW is Toronto, which remains affordable in the face of increasing prices in other parts of Newcastle. Margaret suggests choosing a freestanding house closer to the Coal Point border.
Margaret Lomas: Queensland Property Market
- Brisbane is expected to be the strongest market in the coming three years with across the board growth at 13%.
- Northern suburbs are expected to be up to double this number.
- Apartment oversupply in Brisbane to drag on values for another 3 years.
- Signs that Brisbane will overtake Melbourne for inward migration including a boost to overseas migration.
- Margaret’s pick to buy property in Queensland is Mount Warren Park, Careseldine, Algester and Springfield.
Margaret Lomas: The Lending Landscape
- How you are assessed for a loan has changed dramatically.
- Now, most banks assess all debt at 7.4% with principal and interest repayments, rather than at actual.
- Credit card limits are assessed at their full limit, irrespective if you pay the total outstanding balance in full each month.
- Living expenses have also changed to actual rather than based on a benchmark.
- Expenses are also based on where you live and the number of children you have.
- Banks have become stricter on what you can buy and won’t accept higher risk properties, such as units in Brisbane.
- Smaller lenders are less strict and you can usually get more money, however you will have to pay a higher interest rate.
Margaret Lomas – Points to note:
- Areas close to major health infrastructure upgrades will fare well as we see improvements to wages in this sector.
- Suburbs and regions offering suitable downsizing housing plus the right kind of services for over 55 are a possibility.
- Areas, where there are significant overseas migrants, should fare well.
- High-end property may be a “sell” right now depending on where it exists.
- Sydney will definitely flatten and Melbourne to follow suit.
- Again, Brisbane showing the most strength for the coming three years with Adelaide close behind. Choose areas with characteristics for the major demand groups outlined.
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