Market experts are suggesting that if Britain follows the vote of its people and removes itself from the European Union (EU), then the Australian property market may benefit. However, a formal exit from the EU may take Britain over 2-years to complete.
According to economists, Australia attracts global capital for its property, but usually, the nation has to compete with Europe for this wealth. With there now being a level of uncertainty between Europe and Britain, Australia may be a more secure investment option.
Australia has a relatively high reputation worldwide as being a ‘sound place to invest’, this is due to the nation having a high level of stability, relatively sound economic growth and a comparatively low risk. Some investors even consider Australia as a haven. So now that European and British markets are more volatile, then it’s highly likely that Australia will become even more desirable.
At present, London is a popular destination for Asian property buyers. However, this may change over the coming months as the market’s in the UK and Europe become unsteady.
Economically speaking, Australia may feel a slight impact from Britain’s exit from the EU. But economists are suggesting that this will only be minimal.
When Britain revealed the ‘Yes’ vote, it was noted that the ASX took a hammering. So with the market share being volatile, financial experts suggest that more investors will turn their attention towards property which is more secure.
Some economists are also suggesting that more expatriates may return home to Australia and that fewer Australians will head overseas. At present, it is estimated that more than 100,000 Australians live in the UK, due to strong cultural links with Australia. The return of some of these Australians to home shores is expected to have a positive impact on the Australian population, which has been at almost its lowest level of growth for a decade.
There is also talk that another official rate cut is imminent in Australia. This decrease in the cash rate will provide further support to the Australian housing market, which is anticipated to have a 7.5% price drop over the coming 12-months. Analysts are saying that they expect the cash rate to fall another .75 basis points taking the rate down to around 1%.
Furthermore, homes price falls in Australia are predominately a result of a 4-year price explosion, with the market now returning to far more realistic levels. The oversupply of new homes is also said to be a contributing factor to price decreases.
Therefore, stronger population growth as a result of the Brexit, further rate cuts and housing price falls may all boost housing demand and abate any negative sentiment towards a housing glut.
The savvy investor thinks with their head and has a calculator handy. They put all emotions aside and look at all opportunities with an open mind.
The market slowdown and a declining interest rate make now the right time for brokers to help their client look at property investment options. CoreLogic housing data even suggests that investor activity is on the rise as lending levels are below targets.
For those looking to invest now, property experts indicate that brokers steer their client towards a balanced investment approach where they focus on moderate capital growth and stronger rental returns. To get your client started, work out how much they can afford to borrow, and calculate all of their costs – stamp duty, conveyancing, inspection fees and bank charges – before you compare lenders. This time is when a mortgage broker can help to determine which loan is best, and you can take the guesswork out of finding the most cost-effective home loan.
Once you have helped your client gain home loan pre-approval, then suggest that they take their time to do market research. If they do this well, then they’ll reap the rewards.
Are you thinking of buying a home? Then contact eChoice and find the right home loan for YOU today.