Investing in Property Popular Again

There has been a large influx of mortgage applications since investors fled the share market, leading to a backlog at some major lenders. Strict new lending criteria are adding to delays, as is the inexperience of home buyers having trouble navigating a maze of paperwork. Banks are being forced to add staff to mortgage processing divisions, which they had previously run down.



Adding to the complexity is recent changes to Australian superannuation laws, which allow superannuation funds to borrow in certain circumstances. Super funds can now borrow against properties that are being let out. Banks have had trouble keeping up with the changes in the rules and are still working on fixing their systems.

Although self-managed super funds can now borrow more against property, they are not allowed to get into negative gearing. In fact super funds will need to invest in property with about 50% equity in order to meet the requirements.


Despite the economic slowdown, the number of home loans is increasing. The latest ABS figures show that the average home loan in Western Australia jumped by over $30,000 during the past year to $264,800.

Despite the strong rise in average home loans, there are still affordable properties in most capital cities, and these are highly sought after as rental properties. There is a tendency to overlook the capital growth potential of older style apartments as well as the large increases in weekly rent that can be achieved through cosmetic renovations.

In the current market where there are a large number of homes for sale, properties which are poorly presented are heavily penalized by buyers. This represents an opportunity for astute investors to purchase an older style property in a good location which only requires cosmetic renovations such as new carpet and internal painting.


If the investor keeps the property, they can rent them out for a higher price because they have been fixed up, which in turn helps them to pay off the mortgage faster.

It is also possible to buy cheaply in areas where there’s a large amount of mortgage stress. Western Sydney areas such as Blaxland have gained a reputation for being heavily mortgaged and susceptible to high levels of default. Several hundred families lost their homes in that area due to mortgage stress last year.

When home ownership declines, demand for rental homes increase, which means investors make a better return. Investors remain wary of the share market, and with the property market giving good returns to investors, they have returned in force to that market. A Brisbane mortgage broker can help you to invest in property if you are looking to get into the market.

Source: http://www.articlealley.com/article_2111053_19.html