Take The Money and Run!

Alex Harris - Noosa4Sale - 21-Mar-2019

With media reports of property prices plunging in southern capitals, this engineered market correction is starting to bite further afield.

As with all things where governments interfere, there is the law of unintended consequences which dictates that more and worse will happen as a result.

And it is because of this interference that we are seeing and experiencing these unintended consequences on the ground.

1. Alongside the federal policy changes aimed at restricting Chinese buyers and sellers, came regulation restricting lending against foreign income.

This took out more than half of the Australian expat buyers – as they earn their income in London, Singapore, Dubai and New York. So they can no longer borrow here to buy here (as they have done for eons) if living and working overseas.

Making up 10% of my buyer pool for holiday units alone, that impacts owners and sellers of said properties. Your Noosa holiday homes and units will stay on the market longer with reduced demand as a result.

2. Then came the restriction on interest-only lending. This took out a portion of the buyers in the market for investments. Banking on capital gain in a rising market, these buyers generally flip the property in 2-3 years to pay out the loan and pocket the gain.

But facing dropping values in key markets, banks imposed their own additional restrictions on investment lending, impacting a far wider pool of buyers than those targeted by the aforementioned policy.

While the government has with a sense of panic recently lifted its own restrictions on interest only loans, bank restrictions remain.

3. The rules around buying property in Self Managed Super Funds have tightened as have rules around gearing superannuation into property.

Investment lending has as a result of all the above, flatlined.

4. Along with the uncertainty created by political promises of changes to negative gearing and capital gains tax policies particularly, this has created a vacuum of investment buyers in markets like Noosa.

Where demand for investments vs owner occupier Noosa property had run at 50/50 the past several years, it is now 80% owner occupier.

5. And then came the Royal Commission “we had to have”.

We are as a result of all of the above experiencing longer days on market, lower buyer enquiry and more frustratingly, every second contract falling over due to finance. More specifically, the inability of buyers to obtain finance.

The banks, while taking a public beating in the hearings, have been desperately seeking reasons to say no. Loans are being rejected under the most benign of situations, buyers with millions of dollars of assets are being shown the door, or having to put up multiple properties as security for one simple investment purchase.

As a direct result, sales volumes are well down, and agents across the country are selling every other property twice and sometimes three times in the wake of contracts failing.

Add the looming deadline of a federal election and the prospect of change and our national property market is suffering a crisis of confidence. Noosa is not immune.

However, it is not all doom and gloom.

Our saving grace is the increasing migration north and corresponding demand for owner occupier properties, the continued investment in infrastructure leading to and within the Sunshine Coast, tourism industry growth and an economy broadening to education and health industries. 

It is this that will continue to drive buyer demand, and thankfully those buyers are increasingly cash buyers.

Cash buyers bring a certain power to the negotiation table that will put downward pressure on prices, but we have experienced such a lift in property values in the 5 years since I commenced in real estate, this is not of major concern.

My advice to sellers is take the money and run.


Featured property:
23 Jacksonia Place, Noosaville
5 bed, 2 bath, 2 car
Suit Buyers Mid$800s
Easy Living
In the established tree-lined stage one of Doonella Estate in Noosaville, 
this sprawling single level home with its soaring ceilings and massive living spaces 
is low-maintenance easy living.
An area where parking demands a premium,
23 Jacksonia has parking for 2 cars in the garage,
Caravan and/boat to the side, and 4 more cars in the drive.