What property investors can do when they hit the ‘serviceability wall’

By Bianca Dabu 19 December 2019 | 1 minute read

After successfully accumulating six properties in over a year, investor Julian Lancey has “hit a wall”, unable to grow his portfolio any further due to serviceability issues. How could he find his way out of the unfortunate situation?

Stressed investor

For 18 months, Mr Lancey has refrained from buying any new property because of certain challenges to his finances.

The credit restrictions set by the Australian Prudential Regulation Authority (APRA) and the fluctuating interest rates have also hindered him from having access to financing necessary to grow his portfolio.

“I’ve gone to banks, I’ve gone to brokers, and the restrictions that they’ve placed on investor in those past couple of years have basically made it impossible for me,” the investor shared.

To keep his existing properties afloat, Mr Lancey chose to refinance and pull a bit of equity out of his assets.


However, Mr Lancey admitted that it was frustrating to have to sit on his hands for a time being while other investors continue to purchase new assets.

Will he ultimately get past this predicament?

Passion for property

While not being able to buy new properties may seem frustrating, Mr Lancey learned that any portfolio can continuously achieve growth over the long term if they are made up of good properties.

Most of his properties are located in the city, at Potts Point, Darlinghurst, Northern Beaches and Western City, and their values have “gone crazy” since the time that they were bought, according to him.

In fact, if he sold all of his properties right now, he would instantly become a millionaire.

“That’s a wonderful feeling, to know that in my life I’ve never been given anything, and now I’m turning 40 and thinking, ‘Oh wow, I’ve hit a million bucks,’” Mr Lancey said.

However, retiring remains out of the picture for the property investor.

According to him, he carries the same passion and hunger for property investment as he did when he first started buying properties with the aim of creating wealth.

For Mr Lancey, his predicament on serviceability and financing is but a temporary roadblock that he will eventually overcome in time.

“I would buy if I could buy but I can’t, so what can I do? I’ve done different things – I’ve renovated, I’ve fixed this and that, I’ve refinanced – I just can’t get another one at the moment,” he said.

Market cycles

At some point, every investor is likely to find himself struggling to get financing for their portfolio, especially in a tightening credit environment.

However, experts remind investors that in the property market, “everything moves in cycles” and the “serviceability wall” won’t be standing tall forever.

“The dynamics in the marketplace is in response to perceived – some would say actual – unsustainable rampant increases in property values. There’s been a lot of people in the market buying property who perhaps shouldn’t be buying property, who are redlining it,” Smart Property Investment’s Phil Tarrant said.

“Things move in cycles, so there will be a point in time when the banks are able to take the handbrake off some of the way in which they lend. Banks want to lend money. That’s how they make money.

“Markets change – today’s market isn't tomorrow’s market – and we’re fortunate that, as a nation, we have a strong property market, we have strong banks.”

According to Mr Lancey, buying properties as investments has been “one of the best things in his life”, and there’s no better wealth-creation vehicle for him, which is why he wants to continue to seek and create opportunities to manufacture wealth in the property market.

After all, he aims to provide long-term financial security and stability not just for himself but, more importantly, for his growing family.

Moving forward, the investor aims to further educate himself in order to continue his journey, and engage property professionals who will guide him towards jumping back into the market as an active buyer.



Property refers to either a tangible or intangible item that an individual or business has legal rights or ownership of, such as houses, cars, stocks or bond certificates.

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What property investors can do when they hit the ‘serviceability wall’
Stressed investor
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