A housing bubble is a period of rapid growth in property prices, followed by a drop in prices back to the original point. For example if the market started at $300 000 and inflated rapidly and unexpectedly to $600 000, then fell over time to the $300 000 mark or below, this cycle could be termed a ‘Housing Bubble’.
While the Reserve Bank has dropped interest rates, APRA (Australian Prudential Regulation Authority) is trying to cool Sydney’s housing market by scrutinizing banks’ lending policies for investment purposes. This has led to many lending policy changes by the major four banks in the last few weeks, specifically in regards to investment lending, including changes to the LVR (Loan to Valuation Ratio), SMSF (Self-Managed Super Fund) lending and types of acceptable income.
So what has changed?
This is one of the most common questions I am asked. And yes, they certainly are. One bedroom apartments are gaining in popularity, largely due to the increase in Gen Y numbers renting, the question is what constitutes the right one-bedroom apartment as an investment property?
There are a number of essential factors that make an apartment appealing to Gen Ys and it is this formula that we concentrate on perfecting at Calla Property.
In the 1950’s we were introduced to the ‘Great Australian Dream’. A big house on a big block of land. The Hills hoist featuring in the large back yard. Large enough for all the neighbourhood kids to gather for daily cricket matches through the long summer afternoons.
Baby boomers raised their families in these constructions of suburban nirvana in the 70’s and 80’s.
Have you ever thought about writing down your essential tips for life to hand down to your kids, to help them on their way?
I mean, not just about the ‘meaning of life’, but more the practical side of life. How they can build themselves a secure financial foundation that will set them up for a very comfortable life!
Well, we at Calla Property have started that list for you and we are really happy to share it.
What does this mean for Sydney’s already over-inflated property market?
Two weeks ago, we met with a young couple who live and work in Sydney and want to buy their first home in Sydney. They’ve been married for a few years and plan to start a family in the next year or two. After months of going to auctions in Sydney and being forced out of the bidding they started to look elsewhere and entertained the idea of buying in the Central Coast region. They had a bad experience with a property shark in Gosford and came very close to buying a property well over-valued. They came to see us, frustrated yet hopeful we could find them a good property in Sydney that they could live in. Sadly, we weren’t able to help them and yesterday’s news of the RBA cutting the cash rate is just more bad news for them. Even with a deposit of $110K they will not be able to get into the Sydney home market.
Applying for your first home loan can be a daunting task and I’m often amazed at the preconceptions people have about lending policy. So what do you need to know and what are the banks looking for?
Lending policy falls into two main areas – 1. Security and 2. Serviceability.
Are you thinking about becoming a property investor? It’s incredibly important to approach buying an investment property in a different way than buying a home. Here are 3 important considerations for anyone looking to invest in property.
The structure of your loan is really important if you have a view to long term investing.
You may or may not have heard of cross collateralisation or cross securitisation, however it is one of the fundamental structural concerns to get right from the outset.
So what is it?