Despite Sydney approaching the end of an investor boom, one real estate CEO says there are more opportunities just around the corner.
New measures introduced in March by the Australian Prudential Regulation Authority (APRA) to tighten requirements on interest-only loans and property investments in self-managed super funds have reduced the number of Sydney investors purchasing property by 20 per cent, but is not a bad thing. It is indicative of a cooling market, according to Driscoll, CEO of Starr Partners.
“Many experts believe we shouldn’t interfere with the market and simply let nature take its course, but I feel that this laissez-faire approach would have had dire consequences,” Mr Driscoll said.
“Although there are several factors at play, the excessive number of investors in the market [is] primarily responsible for the recent exponential price growth, so it is encouraging to see [further] tightening is putting the brakes on the investor boom – which is what the measures [are] designed to do.”
Instead of bracing for a crash, Mr Driscoll said investors should be preparing for the “inevitable scaremongering”.
“I believe the market has now plateaued, which [is] inevitable as prices couldn’t continue to rise indefinitely, but this shouldn’t be a reason to panic,” he said.
“We must caution against the inevitable scaremongering and maintain some perspective because we are looking at the aftermath of the investor ‘boom’, but that doesn’t mean we are heading for a crash.”
Mr Driscoll predicted Sydney prices will not change in the short- to long-term, and over time will readjust.
“I remain very optimistic about the Sydney market. We will see a correction in prices but there are so many variables, making it difficult to forecast,” he said.
“Over the past 18 to 24 months, we’ve witnessed prices across most Sydney suburbs rise at the same pace, which is quite unusual, so we could see this start to adjust and become nuanced.”
Instead of directly approaching ways to solve housing affordability, Mr Driscoll sees the new APRA measures for lending institutions to be cautions.
Regardless, he states that there will be more first home buyers, giving investors more competition, which will be nothing new for experienced investors.
“A bump in the road won’t be too impactful for experienced investors. Normally, they are very sensible in their approach, they have enough capital in their investment portfolio and carry a long-term view,” Mr Driscoll said.