Property Analysis – October 2018
POSITIVES
1. Population Growth All States +/-200k pa.
________________ NEGATIVES _____________ .
- Interest rates moving up – particularly Investment Loans
- Tighter Bank Lending – max 10% growth APRA imposed on banks
- Very limited access to I/O Loans
- LVR’s decrease – SMSF / Other – Greater deposits req’d & liquidity
- Non Residents – Duties – Vacancy Tax States
- Non Residents – CGT PPR 6 Yr Exemption Proposed to be Removed
- Impact of Land Tax – Higher Land Values
- More Supply of properties – $300k Downsize Tfr to Super Cap – Retirees
- ATO – No claims of Investment Property Travel post 1/7/17
- ATO – Reduced Depreciation All’ce Existing Assets ( QS )
- ATO – Certificate of Residency $2M to $750k 12.5% Withholding
- Increases in Cost of Living – Power etc etc Capacity to service debt
- No or very low % increase in Real Wages
- O’ seas Investors – China etc , 50% down from 2016 year
- Credit concerns from China, lending restricted and flow of funds
- Oversupply of Units – Sydney, Melbourne and Brisbane
- ‘Fight’ for tenants – Rent incentives evident in market
- Developers cannot secure finance – property disposals ( Wanda )
- Developer’s GST taken away at source of transactions, Wholesale Disp.
- Home loan arrears hit five year high – Mainly in WA
- Key Drivers Negative – Clearance Rates down to 50% & below ( buyer advantage <50%) vs 80% prior year, Price Gap increasing , Investors Mix declining indicating softer market. Price decline ~ -10% p.a.
- Reserve Bank of Australia now stepping in to stress test the Banking System – Analysis Top Down as opposed to Bottom Up by APRA/ Banks to date.
- Bank Royal Commission in progress – Further constrain on bank lending
- SMSF Lending shrinking – STG/WBC withdraws from this segment
- Landlord protection weaker due to Tribunal Outcomes -Tenant’s Rights
** Government plans to cap this to +/-70k p.a. for Sydney down from approx. 100k, which may become a negative !
This document is of general nature only and has not been tailored to your personal circumstances. Please seek personal advice prior to acting on this information.
