Overlooked cities will experience a boom in new house buys, a property investment expert predicts
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While some fear the royal commission’s probe into the banking and finance sector has taken its toll on the housing market, On Your Side Investments founder Mike Harvey sees a bright side to the situation.
But first there will be a greater onus on banks to verify income and expenses, which as brokers already know, has slowed the process down and made it more onerous for buyers-in-waiting.
“The downside is the extra costs to banks are likely to be passed on in the form of higher interest rates,” the property investment expert said in a statement.
He has no doubts that tighter servicing requirements will prompt people to get fewer loans and a decrease in the number of houses being built, which will have a counterproductive effect on increasing housing affordability. Factoring in the country’s strong population growth, Harvey anticipates demand will increase, leaving only one way for rents and house costs to go.
“There’s an increase in demand for Brisbane properties much like there was for Sydney and Melbourne before their boom phase, so we can fully expect a 40% to 70% increase in Brisbane house prices over the next three to four years,” he added.
While cities like Melbourne and Sydney will always remain good places to invest because of their sheer size, infrastructure, population, business hubs, and tourism, Harvey acknowledged that other cities are now beginning “to gain momentum as a result of external factors such as the royal commission.”
As Sydney’s market stabilises, Harvey expects that people will see another smaller growth spurt for the city and Melbourne over the next one or two years. His simple advice for prospective home buyers is to “hold onto your hats”, and for those who pass the bank servicing requirements it’s “to look very closely and then act if you can”.
