May 28, 2018
When the world of finance changes, property investors must be prepared to change with it.
In today’s episode, I’ll be chatting with property analyst Pete Wargent about recent changes in finance and how they have affected his investment strategies.
Changes in the market and new regulations affect the property cycle, and investors must adjust their strategies at different phases in the cycle.
These changes also affect different segments of the market differently meaning you may want to avoid certain segments and focus on others.
The changes in bank’s lending policies may also affect your endgame - of your investment strategy of how you will live off your property portfolio.
Listen to our conversation and learn more about how the markets are changing and how you can tweak your investment strategies to keep up with the phases of the investment cycle.
Some of the things we discuss:
- How the APRA (The Australian Prudential Regulation Authority) introduced macro prudential controls have caused banks to change their lending criteria
- The concerns about high levels of debt and speculation that prompted regulators to make changes.
- How new regulations are affecting serviceability, including stress-testing mortgage applications and slower levels of investment lending below certain imposed caps
- How lending controls have changed since the Global Financial Crisis
- What APRA’s restrictions on how quickly banks can grow means for the housing markets
- Which areas of the housing market are most affected by the recent changes, and which are still solid investment opportunities
- How management of personal finances affects the way that regulations will impact borrowers
- Why rentvesting is sometimes a sensible option for people looking to begin growing their investment portfolio
- Why now might be a good time to sell an underperforming property
- How having a large enough pool of equity enables you to have more choices
Links and Resources:
Pete Wargent on Property Update
Some of our favourite quotes from the show:
“I love the old saying that a rising tide lifts all ships and that’s what happened in a lot of our property markets, especially the booming markets of Melbourne and Sydney, and then once the tide goes out, you can see who’s swimming naked.” Michael Yardney
“Human nature is to think that when things are going great they will always continue to do so, but of course there comes a point when valuations are too stretched and that’s arguably what we’ll see over the next year or two.” Pete Wargent
“I’d rather you own one or two good investment grade properties, rather than a bunch of secondary properties, because the stability of the good properties is going to give you the peace of mind and the ability to sleep at night rather than the volatility of the less sound residential real estate assets.” Michael Yardney
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