Do Changes to the Aussie Dollar Actually Mean Anything to the Property Market?

There is always speculation about whether fluctuations in the Australian Dollar are going to affect the property market. This is how many newspapers and forums get your attention. The headlines alone, whether the Aussie dollar is going up or down, are enough to create further speculation.

So what does it mean to the average home buyer looking to own property? The truth is, very little. There are always going to be surges and drops in the market and they are not all as a direct result or even have anything to do with the value of the dollar in ANY country.

There are so many variables that may affect the housing or industrial property markets that you cannot lay blame on what the currency value is alone.

So what other market variables should be considered?

Unemployment
High unemployment will definitely affect the market. This is due to an increase in foreclosures.

Oil and Commodities
An increase or decrease in the cost of these essential products can affect how much money people are spending at any one time and how much spare cash they have.

Tourism
When the Australian dollar is low, coming to this great country is way more attractive and certainly more affordable. The influx of overseas tourists, yes due to the low dollar, can change and affect property values should these tourists also be interested in buying property.

The Reserve Bank
The Reserve Bank controls the cost of lending money. We all wait with baited breath every time the Reserve Bank is going to release its findings.

Lower interest costs mean that consumers spend more. Higher interest costs would seem to mean less spending but not in all sections of the market.

What Does it All Mean?
If you have all of these factors in alignment, the moon is full and your tongue is hanging the right way, you may be able to predict and pinpoint the exact time to get in and out of the property market.

Time and time again, the economists have had it wrong and we have all survived.

What we say at Fountain Property Group is – go back to basics.

Do a budget to ascertain if you can afford to enter the property market.
Ensure you have enough capital (deposit) to invest in the deal.
Do your due diligence! – Research, research, research
If you do these three things, it does not matter what state the dollar is in when you enter the property market, you will be on a winning course.

Low Interest Rates Continue – Let’s Party

Here in Australia we are so lucky to continue to experience low interest rates. Long gone are the days of escalating rates that took people’s homes and livelihoods away from them.

Through careful observation the Reserve Bank of Australia continues to monitor and control the rates we pay on our mortgages and keeps them as low as possible.

We are not suggesting for one minute that it is a good idea to go out and blow any spare cash you have. This is not what we recommend when we say – Let’s Party!

Rather, we are thinking more along the lines of:
1. Let’s get into the market and take full advantage of this great situation
2. Pay down your current mortgage as quickly as possible and then do the first point.

Now this is something to celebrate!
Imagine if you can, being able to pay down your mortgage in under five years. If this is your plan you could not hope for a better environment to do it in than when rates are low.

Once you have your money under control (and not the other way down) you free up your cash to do something worthwhile. Think of holidays, restaurants and theme parks with the children. Perhaps do a course and learn something new or even get into an investment property.

Property Investment – The Greatest Nest Egg
If you are dreaming of building a nest egg for you and your family then now is the best time to dive in.

The persistently low interest rates make it easy for you to move into the investment scene and build an empire to sustain you and your crew.

Fountain Property Group specialise in sourcing exactly what you need and can afford. We are not bound by territories and boundaries and are able to search for that unique and perfect investment wherever the market may take us.

Whether you are dipping your toe into this amazing, fortune building environment for the first time or you are a seasoned professional, we are able to source and provide the right property at the right price.

Whilst the days of escalating interest rates are long gone, they are not forgotten and they still provide the angst to deter and even stop an investor in his or her tracks.

It is essential that due diligence is conducted for each and every property that is considered. We do all the hard work for you and take the stress out of the decision making phase.

What Do The Banks Look For?

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Whether you are just starting out or a seasoned property investor your lending institution possesses important criteria that must be satisfied if you are to proceed down the road of investing, growing and holding your wealth in real estate.

So what do the lending institutions look for when considering the benefits and risks of lending money?

We have a favourite list called the 5Cc’s of Success that Fountain Property Group would like to unpack for you. Every lending institution will assess these five things.

  1. Credit worthiness
  2. Capital
  3. Collateral
  4. Capacity
  5. Character

Let’s start at the beginning.

Credit Worthiness

A good way to start your journey to fortune is to set down a good base on which to build. You may not realise it but your every credit move is monitored and defaults on loans are reported.

This means the television, sound system, or white goods you purchased on your Myer card. It means that personal loan you took out to buy a new car. It means the credit card you use for everyday expenses.

To achieve excellent credit worthiness, it is essential to have a proven record highlighting you honouring your part of the bargain by paying the required amount on time, every time.

Capital

In most cases, a lending institution will require you have some money behind you to help finance your venture. This figure may range from a 10% – 50% deposit and is governed by the outcome according to the other four C’s.

Collateral

There is not a lending institution alive that would lend money without ensuring that their risk is covered. This will usually come from the asset being purchased but may come from other sources such as other property or possessions.

Capacity

Your ability or capacity to pay the minimum required payment will also be assessed. During this assessment, your other commitments must be taken into account. It is imperative to prove that your current income covers your current commitments and can incorporate further debt.

All sources of income can be offered for assessment. These may include:

  • Wages from your place of employment
  • Rental income
  • Stocks and Bonds
  • Passive income

Character

Whilst it is unlikely that your bank will require you to be submitted to a psychological test it does not mean that your character cannot be assessed. Vital information can be gleaned from the simple knowing of your employment record and living conditions.

By this, we mean the bank wants to see a record of steady employment; the longer the better. The same goes for your living conditions. Whether you stay in one place or move around a lot will also be assessed.

How Do You Know When You Are Market Ready?

Real Estate is one of the best investments you can make for your future.

You have something tangible to hold on to and look at and if you buy correctly, whilst there may be little blips in the market, there is rarely, if ever, a total meltdown like there can be in volatile industries such as shares.

Yes, it’s true that you do have to spend a little more time searching and researching or conducting what is commonly coined “due diligence” but the truth is that once you know your area of choice you can begin to make informed decisions just by knowing the address!

Fountain Property Group comprises a group of enthusiastic individuals who walk the walk and talk the talk. We are all property investors ourselves so we know what we are talking about and today we want to share with you some golden tips to help you decide when you are ready to plunge into the market or a particular purchase.

If You Have Cash or Equity You Can Invest

Obviously, money is the key ingredient in any investment. In the real estate industry it is essential to have some cash behind you.

This is not only to offer a decent deposit but also to have some money in reserve for that unexpected expense or repair.

If you have saved, inherited or gained a foothold in the savings area then you are well on your way to forging your own path into this diverse industry.

Knowing What’s What

Due diligence, as we have already mentioned, is essential.

When you find a property that has that particular tingle or buzz don’t be afraid to step back, look at the property from all angles and spread your search a little wider to see what there is to compare your choices with.

This may include other properties, other suburbs, and even data covering a sales history of the area, information from the local council and so on.

If you miss out, don’t panic, there will always be something else to interest you.

Back Up is Important

Once you have fully researched your suburb or area of choice it is important to look into the services available.

By this we mean:-

Does the area have a trustworthy management team in place?

Is there a reliable source of tradesmen to select from such as an electricians, plumbers and carpenters?

Don’t hesitate to call us for more information.

NAB: Queensland Leads All States In Residential Property Strength

The National Australia Bank recently conducted the Residential Property Index for the third quarter of the year and while the overall index remained unchanged, Queensland has overtaken Victoria as the most conducive state for residential property.

Forecasts show that a modest house price growth is set to continue, despite rising unemployment and affordability issues. Overall house prices are set to increase by 4% in 2015 and 2% in 2016. Brisbane and Sydney is expected to lead all capital cities in growth next year.

Read more about this on the Property Observer website.