Tips for those looking to reduce risk in the property market

So, it was interesting to see a recent quarterly publication by a group of property researchers which looked at how people are perceiving potential risks in the housing market of the future, particularly in the medium and long-term.

The report from RiskWise Property Research found that the three major sources of potential risk were housing affordability, lending restrictions, and an oversupply in specific property types and areas.

As we all know, the lending limits imposed by the Australian Prudential Regulation Authority (APRA) have led to a steep decline in financial commitments amongst investors. Of course, the ongoing Royal Commission into the financial industry has resulted in lenders increasing their scrutiny of mortgage loan applications, which has made loans harder to get for many buyers. However, as we have seen recently with some Banks reducing their interest rates to remain competitive, the lenders still need to loan money if they want to make a profit, so it’s likely that the market forces will find a way through this temporary tightening.

Whilst oversupply is certainly an issue in some markets, we shouldn’t overlook that our population is continuing to grow, particularly here in Melbourne, and all these people will want somewhere to live. Combine this growth with the current shortage of supply, and long-term capital growth is still the most likely outcome.

Not surprisingly, the RiskWise report found that here in Victoria the strong labour market and the steady population growth would be able to support housing prices in Victoria despite the recent negativity in some circles.

Don’t forget that if you need some experienced advice on what is happening in the local market here in the City of Darebin, you can call on us at any time.