In his second interview, Erik Bigalk speaks with leading property finance expert Robert Projeski, founder and managing director of Australian Mortgage Options (AMO), looking at what drives unit/apartment market trends and what we can expect into the future.
I asked Mr Projeski, who are the buyers of such apartments and how is the finance climate looking.
He answered, that in terms of property finance, lending caution has urged banks to put more stringent equity requirements in place forcing developers to perform more critical due diligence of projects. This has caused some developments to be stalled, put on hold or being on-sold prior to construction, placing even greater pressure on supply.
Broader, Innovative Home Loan Market
Projeski further added that, in terms of investor and owner occupier finance, the loan market offers such broad products now, with new and more innovative loan products on the market, that there is a loan to suit just about everyone. These range from interest only, investment and equity loans, to split fixed/variable rate mortgages where you can switch between fixed or variable rates (such as AMO's own Future Proof Home Loan) and always pay the lower of the two. Many of these loan products were not even available only a few years ago. This broader range of options has motivated many existing buyers and astute investors to look at refinancing their existing properties and to facilitate additional purchases, especially following the recent interest rate cut.
Nowadays, there are increasing and different types of buyers looking at units and apartments as a lifestyle choice, not just couples looking to buy their first home. There are many change-of-life buyers, young families and empty nesters getting into units and apartments too.
Greater Demand for Units, Town Houses and Affordable Housing
Projeski said, in view of the government abolishing the stamp duty waiver for first home buyers for established properties from January 1st 2012, I believe, we will see more activity from first timers on new and off-the plan property. The stamp-duty saving, lower entry prices and general housing shortage, will have them looking more at units and apartments and affordable new house and land packages.
With an aging population, baby boomers will also continue to be a considerable part of apartment buyers, with many seeking to downgrade to more compact living spaces that are easier to maintain, Projeski points out. As a flow-on of the GFC and its impact on super funds, we will see more sales from this buyer segment to free up cash for living expenses and to diversify investment, with units and affordable housing continuing to be a strong target for this group.
Supply for Affordable Housing Set to Continue
Additionally, with overseas investors looking toward the Australian property market as a more secure investment market and the foreign investment bureau requiring them toward buy new properties (or land), units and apartments are high on the list for desirable purchases. With our national population growth largely due to migration, foreign investment makes up a strong buyer segment in terms of apartments and buying off-the-plan.
This trend means we are looking at a broad scope and increasing numbers of buyers with an ever growing population driving demand for apartment housing up, which should in my view, make for a promising period ahead in terms of unit/apartment sales and further new house and land developments, Projeski said.
In closing, there will naturally be some fluctuation between supply and demand due to variations in population growth and available housing. However in the big picture, we have good indication that the Australian apartment and affordable housing market is set to grow in 2016 and beyond, and is a suitable measure to meet our housing shortage and presents viable investment opportunities, he added.
Property finance expert Robert Projeski has contributed to most leading property investment and finance publications in Australia and appeared on radio and TV. The above expressed views are the views of the individual and are not to be taken as investment or financial planning advice. When considering an investment purchase it is recommended to seek professional advice for due diligence, viability and suitability.