Australia’s top bankers and regulators have signalled that regulations could be in place in future with borrowers’ incomes as a key indicator.
Australia’s rising property prices are currently being driven by a lack of stock and interest from a number of different parties, including first home buyers.
In 2017, investors were driving the market rise, which led to banks and regulators introducing measures to curb borrowing. However, as the industry is still seeing a lot of attention from first home buyers, the restrictions aren’t likely to be introduced soon.
“There does not seem cause for immediate alarm. Nor, though, for complacency.” — Wayne Byres, Chairman of Australian Prudential Regulation Authority (APRA)
If regulators do move to curb borrowing, they will likely bring in changes to stamp duty, negative gearing or capital gains tax (CGT), which are all incentives to encourage owner-occupiers and discourage investors.
As property affordability in cities hit a decline, buyers are looking to move to affordable regional areas. Hence, rentvesting is popping back up in a big way.
Rentvesting as an alternative
Buyers who are currently priced out of the areas they live in are considering rentvesting – where you buy somewhere more affordable (usually somewhere regional) and rent in an area you’re happy to live in.
Here’s a helpful article about how to spot an emerging suburb where you can consider rentvesting.
It’s a particularly attractive option for first home buyers because it allows them to live the lifestyle they want but still get on the property market.
Moreover, you don’t have to pay capital gains tax, solicitor’s fees and the other costs associated with selling a property as a renter.
Apply for a mortgage before restrictions are in place!
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