There is no doubting that the market leaders for real estate growth have been Sydney and Melbourne in the last few years – but how long will this last? According to research from BIS Shrapnel, Melbourne's house prices are going to start falling in the 2016/2017 financial year, while Sydney will experience the same transition.
This is due to a forecast rise in interest rates. BIS Shrapnel believes that the official cash rate and interest rates will only go up by about 50 basis points, but this is enough to temper borrowing and dampen the market.
Understanding where the market will weaken allows you to make the right decisions on where you are going to invest your money and if you are taking out an investment loan need to be aware of the importance of preparing for higher payments down the line, and this is a role that Help with Finance can fill. ASIC are already putting the lenders under pressure to reduce their exposure to investment loans. The banks are responding to this by increasing their rates on investment loans and reducing their rates on Owner occupiers. Some banks are also taking the option of limiting investment loans to 80% of the value of the property.