While lenders contribute to housing undersupply, smart property investors have an opportunity to profit!
According to the Housing Industry Association (HIA), the demand for Australian housing exceeds supply by approximately 40,000 each year. For those of us who have studied basic economics, when demand exceeds supply, prices increase. This adds further pressure for house prices to increase which in turn reduces the level of affordability.
Property industry professionals understand and accept that lenders are now under more scrutiny than ever before – with new lending legislation (Credit Code) introduced recently, not to mention the Global Financial Crisis (GFC).
However there is an irony here – especially when you consider this country’s desperate need for housing. On the one hand it is absolutely essential that Australia continues to regulate its finance industry to ensure we never end up in a situation similar to America. On the other hand, the tighter the lending market becomes, the more desperate our housing shortage.
By way of example, according to a recent survey by the Master Builders Association of Victoria, there is an undersupply of 29,000 homes in Victoria with 5,000 too few homes being built each year. If this continues and you are interested in where Victoria will be in 10 years (the average time it takes for property to double in value), it’s a pretty simple equation: 29,000 + (5,000 x 10 years) = 79,000…that’s a 79,000 housing shortage in Victoria alone.
According to Executive Director of the MBA Victoria Brian Welch, the MBA survey clearly showed the impact of tighter lending practices.
An opportunity to profit
So the question is…how can property investors profit from the housing undersupply?
The answer to this question gets back to basic economics – when demand exceeds supply, prices increase.
The world’s greatest investor Warren Buffet advocates not following the crowd, ie doing the opposite to the majority. In terms of the property market, right now is a buyers market and smart investors are getting into the market, while not so smart investors (the majority) are sitting on their hands.
So cutting to the chase, now is the time to be buying property in Australia BUT with one very big caveat…do your research AND if you’re unsure as to what you’re doing, hire professionals to help.
Even those of us who do this for a living (as professional buyers agents), surround ourselves with a team of professionals including lawyers, accountants, building/pest inspectors, mortgage brokers, quantity surveyors, etc.
Let’s face it, buying real estate is the most significant purchase most Australians will ever make. If you make a mistake, the penalty is both very costly and long-term. So it pays to get it right!
If you would like to learn more about investing in Australia real estate, visit our website at: www.ifyl.com.au where you can download your FREE Report…”The 7 Most Costly Mistakes Property Investors Make And How To Avoid Them”