Last year we did our first predictions blog and it was mostly correct. So, we thought we’d give our dear Founder and Director Barry another crack at looking into his crystal ball to see if he could be right for the second year in a row (this is not to be used forever more in arguments with his wife, however).
Here’s what Barry has to say:
2018 has been a big year in the financial services industry with a number of changes brought about by the regulators and the effects of the Financial Services Royal Commission being felt. Loan applications are being scrutinised with a fine-tooth comb more than ever before and this has meant it’s much more difficult to obtain finance approval. We don’t see the current level of scrutiny for loan applications by lenders easing up and, depending on the final report from the Financial Services Royal Commission, this could get better or even worse.
Undoubtedly, this is having a flow on affect in the economy with housing prices on the decline in a number of cities and even the normally solid market for vehicle purchase is trending downwards compared to previous years. Many economic forecasters don’t see a change in interest rates from the Reserve Bank of Australia until 2020. This doesn’t mean we won’t see further interest rate changes by the banks as the cost of them borrowing money from overseas has been increasing.
There is uncertainty in political circles with a Federal election due in the first half of 2019 where it’s widely expected that the Labour government will be elected. Labour has a primary policy on the reform of negative gearing and this could have a mammoth negative effect on all investing, property, and otherwise.
On the Property Market
We have seen the Sydney and Melbourne markets decline and they may possibly stabilise; it’s definitely a buyers’ market now in these locations. Adelaide and Canberra (depending on Federal election outcomes) will most likely continue to grow, albeit slower than in previous years.
Most are saying the Perth market has hit the bottom and will be on the way up from there. Things should all but stall in Hobart and Darwin. Queensland, with its distinct markets of the Sunshine Coast, Gold Coast, and Brisbane are always more variable than the rest of the capital cities. Brisbane may possibly slow down faster than the Sunshine Coast and Gold Coast as people who are less risk averse will try their luck in these two locations.
Large Regional centres like the Sunshine Coast (QLD) and Gold Coast (QLD), Geelong (Vic), Maldon (Vic), Castlemaine (Vic), Newcastle (NSW), Wollongong (NSW), and Launceston (Tas) will probably begin to increase as baby boomers move into retirement, downsize, and no longer want to deal with city traffic. Smaller regional centres are less desirable and more suited for people who are willing to take on a bigger level of risk.
The need for brokers has become more imperative as many lenders just won’t do the same loans they did in the past. The smaller lenders who don’t have local branches, unlike the big lenders, have much better interest rates and this is also where brokers can really shine for clients. In this uncertain landscape, brokers can help navigate these ever-changing waters to get you the best loans that suit your needs. We strive to make the loan application process as easy as possible with good communication and regular updates. It may also be time to consider getting a loan pre-approval before thinking about buying or selling property, so you know exactly what you can spend. Please get in touch with the Clever Finance Solutions team if you want to know more.