China is in a free-fall, property has peaked and there is talk of a recession. How do you make sure you come out ahead?
My colleagues in Chan & Naylor Wealth probably have a broader perspective on 2016 for investors. But I wanted to add a few thoughts on the finance process so that you don’t end up with a dud. But these thoughts come down to one thing – take your time.
Residential property has limited growth ahead of it. This means that increasingly it is a buyers’ market. Unfortunately there are still some Melbourne and Sydney sellers who anticipate double-digit growth and will try to drive up the price as much as possible.
So you can be sure that you don’t overpay, you may want to chat to the Chan and Naylor Finance team about a valuation. Many banks will allow C&N brokers to arrange a valuation on a property before you have signed for it. Armed with such a valuation you will be able to negotiate with the vendor, knowing the value of the property.
If, for some reason, it is not possible to arrange an upfront valuation, then you may want to take advantage of a cooling-off period. Many Australian states allow you to make an offer of a property with a statutory cooling-off period which allows you to ensure that the bank agrees with you on what it is worth.
Commercial Property is probably expected to have greater returns than residential. But commercial properties are not for the feint-hearted. The way that the banks analyse finance applications are very different and the valuation process is more sophisticated. Often the banks require you to show a good business case before they can lend. Here, the wider C&N team can help you to present your application to the bank.
Interest rates are at record lows. And if anything, will get lower. However, don’t bet your house on massive drops in interest rates – the Reserve Bank is in no hurry. While rates are likely to drop a little further, there are two reasons why it won’t be much
- The Reserve Bank has admitted that further interest rate cuts are unlikely to have that big a stimulatory effect on the economy.
- ABS jobs data shows that the economy is transitioning from resources to other sectors; which means that, overall, we are likely to hold up well.
As a result, even if you may not achieve stellar growth, many property investments will be on solid foundations – if you plan them right.
Graeme Salt – National Client Finance Manager – Chan & Naylor Finance
Disclaimer: This article contains general information. Before you make any financial or investment decision you should seek professional advice to take into account your individual objectives, financial situation and individual needs.