As with the property market in almost every country in the developed world, the Australian property market has become vastly more stringent and complex over the last decade or so following the global financial crisis. To simplify a vastly complex mess, this period saw banks, many of whom were in Europe, find that they had authorised too many high risk loans. The vast majority of these loans were mortgages where a 2% or even 0% deposit was required, posing a very high risk to the bank. As interest rates shifted, many people began to default on their repayments and this led to banks being severely underfunded. Essentially they had flown too close to the sun for too long and that gamble was now falling apart.
Is the market too stringent these days?
Honestly, not really. Lenders are being more careful and taking far fewer risks with their products, but there is still ample room for legitimate home loans. As an investment loan is the biggest stepping stone to acquiring an investment property and the real key to securing one is to ensure you have adequate capital to use as a deposit.
So I would need a large amount of cash upfront?
Although it would appear so at first, this is not necessarily the case. Experts make it clear that although a strong deposit is needed, this does not have to be cash from your own pocket. In fact they detail a few extra bits of information that would be very useful on this endeavour, but the basics are that with the right property, the right lender can take security in other ways, possibly preventing you from needed to splash the cash.
But is it still worth the investment?
Nothing is certain in business, just ask Apple. Their board of directors never thought that firing Steve Jobs in 1985 would have such an adverse affect on their stock prices, which tumbled from $8 a share to under $2. Admittedly they recovered, but it has been an incredibly bumpy ride, far more so than most people realise. The point here is that no one can promise you a guaranteed return from an investment, it is always a gamble to some degree. But investing in property is almost certainly a safer bet than firing a slightly odd yet charismatic CEO. There is always a need for property and so long as you choose carefully there is no reason that you shouldn’t make a return.
Investing in property is definitely less straightforward than it has been in the past, but that is not necessarily a bad thing. The market has taken huge steps to improve its safety and stability and this is just as good for customers as it is lenders. As with buying any property, taking your time and doing plenty of research into any and every factor affecting it will more than likely see you coming out on top. Just remember that nothing in life is certain.