Fluctuating Australian Property Market: Should You Buy?
Following a year of interest rate rises, diminished borrowing capacity, and soaring rents, the Australian property market appears more dynamic than ever. With these ongoing changes, exploring your investment financing options is more important than ever. A competitive mortgage will ultimately lower your borrowing costs and make your investment more successful.
Understanding different financing choices will also help you adapt to changes in the market and be more flexible with your finances. In uncertain times, exploring financing options empowers you to make smart decisions, grab opportunities, and handle challenges wisely. So, before deciding to buy property in Australia, take a close look at your financing choices—it could make a big difference.
Current Landscape of the Australian Property Market
The tail-end of 2023 saw numerous peaks in the Australian property market. By mid-November, the combined median house prices for regional areas and capital cities were both at an all-time high. In Brisbane, the median house price reached a new peak of $865,072. These records are expected to be eclipsed by the end of 2024, with the property market in Brisbane forecast to rise by 7-8% for houses and 4-6% for units.
With inner city homes becoming less affordable, more people are likely to turn their attention towards “bridesmaid” suburbs where they can get a better deal. This kind of movement in the Brisbane property market will contribute to the ongoing urban spread.
Why It’s the Right Time to Buy Property in Australia
So, why is 2024 a good time to buy property in Australia? Several factors need to be considered. Firstly, housing affordability is causing more people to rent for longer. This has led to record-low vacancy rates and an increase in the asking price of rentals across the country.
Additionally, the increased interest rates of the past 18 months have caused some landlords to exit the property market. Investors who are ready to buy may benefit from owners who are looking to offload their investments as soon as possible.
Financing Options for Property Investment
There are several different financing options available for investors looking to buy property in Australia. These include:
- Traditional mortgage: A standard home loan that allows borrowers to choose between fixed and variable interest rates.
- Investment loans: Specifically designed for property investment, these often provide different rates and features compared to traditional home loans.
- Interest-only loans: A borrower makes interest-only repayments for a specified period (usually 5 years).
- Line of Credit Loans: A revolving credit account that allows access to funds up to a set limit. It offers greater flexibility for investors to use funds as needed.
- Equity Loans: When you use the equity in existing properties as security for another loan. This leverages existing assets to allow for further investment.
- SMSF Loans: Self-Managed Super Funds (SMSFs) can obtain finance to invest in property. This is a complex structure with specific regulations.
To ensure you get the right financing structure to suit your needs, it’s a good idea to seek expert advice from an experienced investment mortgage broker.
Who Can Buy Property in Australia?
But who can buy property in Australia? There are certain restrictions on foreign investment in Australia, such as:
- Foreign investors will require permission from the Foreign Investment Review Board (FIRB) unless an exemption is granted.
- Temporary residents can usually purchase one existing property to use as their residence in Australia.
- Foreign investors may be approved by FIRB to buy vacant land for residential development under certain conditions.
Penalties for non-compliance can include fines and forced sales, so it’s important to get a clear understanding of who can buy property in Australia before moving ahead with a purchase.
Talk to a Mortgage Broker About Financing Options for the Australian Property Market
Are you planning to buy property in Australia in 2024? Understanding your financing options could mean the difference between a successful investment and a financial burden. North Brisbane Home Loans can help you navigate the fluctuating Australian property market by providing expert advice on your investment financing options. Book an appointment today to find out more.
Patrick Cranshaw, a Certified Mortgage Professional for over 21 years, founded North Brisbane Home Loans in 2002. His career began with ANZ Bank in New Zealand, where he progressed over 16 years to a Business Banking role in Virginia. After moving to Brisbane in 2000, Patrick led the QLD market for a home loan agency, helped set up the REMAX Real Estate Finance division, and practiced as a broker.
