Property markets changing for the better: mortgage broker

However, the recent fluctuations in the property market, particularly the credit environment, has reduced the borrowing capacity of a lot of Australians, rendering them incapable of continuing their wealth creation journey.

After 12 months of tightening in lending, following the conclusion of the federal election, two consecutive rate cuts by the Reserve Bank and the easement of rules on loan serviceability assessment, experts and investors are hopeful that the property market is now heading to “a state of stability”.

According to Ms Schulze: “Moving forward, we’re going to start to see a new norm. We’re going to start to see some common sense coming back into lending, which is something that I really welcome.”

Since early July, several lenders have started to ease their loan serviceability terms, including The Bank of Sydney, ANZ, Westpac, Macquarie, Suncorp, National Australia Bank and more.

Over the next four to six months, Ms Schulze expects the changes to filter through, ultimately improving most people’s borrowing capacity.

Property investment: post-election

As a mortgage broker, Ms Schulze ensures the best service for her clients by giving them access to information relevant to their wealth creation journey.

One of the ways through which she maximises resources for her clients is by engaging with politicians and government bodies that ultimately impact the movements of property markets across Australian states and territories.

According to her: “Following the royal commission, I’ve been fortunate to be able to spend a lot of time with politicians…I’m just lobbying on behalf of my clients because, at the end of the day, I care about them and the fact that they want to invest in property, grow their wealth and be in charge of their own future.”

“I think, sometimes, politicians and governments make decisions based on what they think is right, but they don’t necessarily understand the implications [on] the mom and dad investors or the people that are actually just trying to get ahead [in] working hard.”

In talking to them, Ms Schulze feels confident that the current government is eager to resolve the issues that hinder all investors, both seasoned and aspiring, to enter the property market and remain in it for the long term.

Ultimately, “they want people to buy property,” Ms Schulze highlighted.

“I’ve been really amazed at how open they’ve been and how willing they’ve been to listen. Leading up to the election, there was a lot of uncertainty about what was going to happen, but I was very pleased with the results that we got because I feel really confident that the Liberal government [does] want people to buy property…They see that there is a credit crunch and they don’t want that to continue,” she said.

Since the conclusion of the federal election, RBA has decided to cut the official cash rate to a new record low level of 1.0 per cent — a back-to-back rate cut after the cash rate was moved to 1.25 per cent in June.

The Australian Prudential Regulation Authority (APRA) has also changed its home lending guidance so that it will no longer be necessary to assess loan serviceability on the assumption of a 7 per cent interest rate. Instead, the lenders will be in the driver’s seat, and authorised deposit-taking institutions (ADIs) will be able to set their own review standards, factoring in a buffer of at least 2.5 per cent interest.

Further, the government has recently passed cuts to personal income tax rates.

Ms Schulze said: “I feel like they do want credit to be loosened, not to a ridiculous point, but just enough so that we are applying common sense to these decisions and people are able to invest in property again.”

No doom and gloom

While Ms Schulze is positive about the future of the market, other property experts remain reluctant about the recovery of the property market, especially as Sydney and Melbourne have seen some of their biggest declines in years.

Some commentators even go as far as predicting that the market will go south by as much as 40 per cent, ultimately pushing Australia to another financial crisis.

However, most of the recent changes in the property market as a result of socioeconomic and political factors — from the outcome of the royal commission to the result of the federal election — are actually leading toward overall improvement, particularly in some of the biggest capital city markets across the country.

“I’ve been investing for nearly two decades now. Over that period of time, there has always been someone saying that a crash is going to happen but it hasn’t happened,” she said.

“From my perspective, yes, there are ups and downs., but when you look at the long-term average, property is still outperforming every other investment vehicle, including shares. That’s publicly available information that you can get on the internet.

“It’s really important that you are careful about where you get your advice from.”

Ultimately, regardless of the state of the property market, she strongly encourages investors to focus on the fundamentals when making any decision about wealth creation.

“Right now, we are dealing with a situation where interest rates are at historic lows, and we’re about to get another rate cut. That is obviously making property more affordable. We’re looking at an environment where the government is going to be bringing more stimulus for first-time buyers. We’re looking at an environment where we’re going to see lending criteria soften to a reasonable level.”

“I do see positive signs ahead. Our demand as a country still outweighs our supply. When we look at the numbers of population growth, sure, there’s different pockets and different types of properties that you need to be careful with, but if you stick to the basics and the fundamentals, then I think there are really good opportunities in property.

“We’ve got a lot of things going on that are leading to the fact that the next 12 months are going to be a good time for property prices in Australia...That’s my prediction,” Ms Schulze concluded.

Tune in to Marissa Schulze’s episode on The Smart Property Investment Show to find out how to maximise wealth creation opportunities in light of the recent changes in the property market.