10 Feb The areas to watch in 2016 – Margaret Lomas
We check in with Margaret Lomas from Destiny Financial Solutions to hear what she thinks the property landscape will be like. She identifies one of the last capital city markets that will be the big improver this year.
Kevin: As we continue to head into a brand-new year, let’s have a look back at 2015 with our good friend Margaret Lomas from Destiny Financial Solutions.
Margaret, thanks for your time.
Margaret: You’re welcome.
Kevin: Did you have a nice time with Christmas and the family?
Margaret: Yes, we always do, especially with a new grandbaby.
Kevin: Well done. That’s fantastic. A little boy or a girl?
Kevin: Well done. Congratulations, Margaret. That’s lovely news.
Margaret: Thank you.
Kevin: Let’s have a look at property. Let’s turn our attention to that. What were the lessons for you in 2015, Margaret?
Margaret: I guess one of the most important things about 2015 is that you shouldn’t be really listening to everything that is written in the newspapers. Unfortunately, there was all sorts of news about the property boom when, in fact, there were many areas that indeed weren’t booming where there were still some great opportunities.
I think if anyone was really watching those markets in 2015, they were able to pick up some really good bargains that people were missing because everybody was subject to that big buyer frenzy in Sydney and all trying to rush in there while the other areas sat there ripe for the picking.
Kevin: Yes, we did actually see some people rush in and think, “The property boom’s on everywhere; let’s just buy it.” There must have been a number of people who were hurt, I would think, Margaret.
Margaret: I think so, especially toward the end of that boom. We saw it coming. We tried to warn everybody that now wasn’t the time, and now many people who bought into that boom in the closing stages have found that their properties have just started to come off the boil a little and some people, most likely, paid too much.
Kevin: You and I have spoken in the past about buying off-the-plan and the dangers of that. I guess there are going to be many people as this year progresses who won’t simply be able to settle on their new properties, Margaret.
Margaret: Of course, it’s going to be a bit of a double-whammy for them because not only may they find that the prices that they’ve agreed to pay don’t materialize and the banks will value the properties lower than their purchase price, but also of course, with the request from APRA and the tightening up of the banking rules, many banks are now not letting borrowers or investors borrow any more than 80%.
A lot of people who bought off-the-plan properties were doing so thinking that they would be okay to get a 90% loan, so they’re going to be hit from two sides and I don’t like the look of that. I think we’re definitely going to see many people having to forfeit their contracts and therefore, they’re going to be losing quite a lot of money. Most of them would have paid a 10% deposit, so they’re all going to have to forfeit those contracts.
Kevin: A bit of hurt coming. What will you be telling the people you work with, Margaret, about 2016? What are the areas you’ll be watching?
Margaret: I still think that there is a lot of really good property in Brisbane, and I think we can’t ignore the fact that Brisbane is one of the last remaining capital cities where the median price is well below what the average income can afford.
Whenever there’s room between that average income and the median house price, we’ll always see a little bit of pressure on prices. If people look to those areas where there are a lot of families but little new land and some great infrastructure development, they’re still going to see some really good price increases.
Brisbane has been really percolating away in many of those suburbs that people might have missed. Everyone is still thinking about CBDs and 10 kilometers around the CBD, but there is a really good band in Brisbane 10 to 15 kilometers from the CBD where we’re seeing some really good opportunity for growth. The same applies in Melbourne.
I’m really picking some of those suburbs in that 15 kilometer band around Melbourne, not quite as far out as the Craigieburns and the areas where there is plenty of new land, but in those land-locked suburbs of Altona Meadows and Deer Park and around those areas, where we will definitely see some pressure on prices. They’ll behave contrary to the general Melbourne market, which is really being impacted by those off-the-plan sales.
Kevin: What regional markets do you think will fair okay this year, Margaret?
Margaret: I’m not going big on the regions in 2016, again, and I didn’t in 2015, mostly because 2012, 2013 was really strong in the regions and I think anybody who got in then did quite well and will sit on a pretty good property that will get them some fairly good yields and some growth still. But I think a buy in the regions in 2016 may come at the cost of a better buy in some of those capital city suburbs.
Kevin: Margaret, always great talking to you. Thank you so much. Look forward to working with you in 2016. Margaret Lomas, of course, from Destiny Financial Solutions.
Margaret: Thank you for having me.