Powered by MOMENTUM MEDIA
realestatebusiness logo

Subscribe to our newsletter

Analyst issues strong warning to property investors

One prominent property analyst has criticised last week’s rate cut and warned that some buyers will inevitably get burned.

Residex founder John Edwards said Australia is heading into a “significantly over-supplied market” which could lead to “some significant corrections”.

Mr Edwards said the Reserve Bank's 0.25 per cent rate cut would stimulate the market, although lending controls at the big four banks would probably ensure it doesn’t overheat too much.

However, he added that it was likely to have a bad ending, as had other growth periods he has witnessed in his three decades as a property analyst.

“Each period always ends in a certain number of people who buy close to the top of the market with excessive leverage getting burned,” he said.

Advertisement
Advertisement

“I issue a warning to all: we have passed the top of a normal growth period and we are about to have the market stimulated and have further growth.”

Mr Edwards said new investors run the risk of paying a premium, particularly for new units.

He also said this growth period is “taking us into uncharted waters where affordability will be potentially worse than we have previously seen”.

Even with home loans available at 4.5 per cent, the median Sydney family will have only $789 of disposable monthly income after tax and mortgage repayments, Mr Edwards said.

Analyst issues strong warning to property investors
>Residex founder John Edwards said Australia is heading into a “significantly over-supplied market” which could lead to “some significant corrections”.

Mr Edwards said the Reserve Bank's 0.25 per cent rate cut would stimulate the market, although lending controls at the big four banks would probably ensure it doesn’t overheat too much.

However, he added that it was likely to have a bad ending, as had other growth periods he has witnessed in his three decades as a property analyst.

“Each period always ends in a certain number of people who buy close to the top of the market with excessive leverage getting burned,” he said.

“I issue a warning to all: we have passed the top of a normal growth period and we are about to have the market stimulated and have further growth.”

Mr Edwards said new investors run the risk of paying a premium, particularly for new units.

He also said this growth period is “taking us into uncharted waters where affordability will be potentially worse than we have previously seen”.

Even with home loans available at 4.5 per cent, the median Sydney family will have only $789 of disposable monthly income after tax and mortgage repayments, Mr Edwards said.

Analyst issues strong warning to property investors
mortgagebusiness

Latest News

Making news this week, RBA keeps options open for September, Rates up to 91bp higher for existing borrowers: Lendi, RBNZ boosts cash rate to...

While the central bank went hard on its third consecutive 50-bp hike – without considering another option – the August minutes reveal it...

The state’s Premier has said residents impacted by this year’s floods will be offered buy-backs and land swaps, however no date has been...

VIEW ALL

Join Australia's most informed brokers

Do you know which lenders are providing brokers and their customers with the best service?

Use this monthly data to make informed decisions about which lenders to use. Simply contribute to the survey and we'll send you the results directly to your inbox - completely free!

Do you think the new NSW property tax will help or hinder first home buyers?

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.