A property expert has said the effects of the Royal Commission will help the housing markets in smaller cities “gain momentum”.
With increased scrutiny on lenders resulting in tighter lending requirements, many people believe it will be harder to get a loan.
Mike Harvey, founder of On Your Side Investments, agreed the extra work will slow the process down, but said it is not all bad news.
He said, “The downside is the extra costs to banks are likely to be passed on in the form of higher interest rates.
“No doubt with tighter servicing requirements we are going to see less loans and fewer houses being built. Funnily enough, that will have a counterproductive role in the housing affordability crisis, as with our strong population growth demand will increase, leaving only one way for rents and house prices to go.”
Harvey said this means cities which have previously been overlooked will have a boom in new house buys, with frustrated younger buyers moving in.
He added, “We are already seeing a greater influx of people selling off in Melbourne and Sydney and taking the extra equity and buying in Brisbane for half the price and enjoying a better lifestyle.
“There’s an increase in demand for Brisbane properties much like there was for Sydney and Melbourne before their boom phase, so we can fully expect a 40% to 70% increase in Brisbane house prices over the next three to four years as Brisbane does what Brisbane always does.
“While cities like Melbourne and Sydney are always going to be good places to invest because of their sheer size, population, infrastructure, business hubs and tourism, other cities are now starting to gain momentum as a result of external factors such as the royal commission.
“As the Sydney market has stabilised and in fact is dropping slightly, I fully expect we will see another smaller growth spurt potentially for Sydney and certainly Melbourne over the next 1 to 2 years.”
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