A shift in lender appetite, coupled with a decline in property values, saw caution spread throughout the investor market in 2018. In September, ABS figures confirmed the monthly value of new investor housing commitments had fallen to its lowest level since July 2013.
In fact, that month housing finance commitments to investors were down by 33.8% on their April 2015 monthly peak. Further, over the near 30 months the cash rate has been on hold, investor mortgage rates have increased as much as fifty basis points.
“Don’t panic,” says Tony Hayek, CEO and founder of Bluewealth.
“Never have clients needed their brokers to be as clear, insightful, educated and calm, as they do now. The broker is obligated to bring reason to their client’s lives and it’s difficult for them to do that when they are living under a cloud of uncertainty,” he adds.
While Hayek says the current market conditions are likely to continue throughout 2019, recovery will begin once the dust has settled from the royal commission and election.
“The potential introduction of Labour and their changes to negative gearing and capital gains tax, I think [those factors] will have people behaving cautiously and driven by fear for most of next year,” he says.
However, that doesn’t mean to say 2019 will be a lost year for investors. According to Hayek, markets such as Brisbane will continue to perform well and there is plenty of opportunity elsewhere, too.
“The irony of the situation of course is that an environment like this one is when the best investment opportunities actually appear. As Warren Buffet said, be courageous when others are fearful and be fearful when others are courageous,” he says.