With the 2022 federal election on the front of everyone’s mind, property investors need to gauge what our current government is doing to help and/or hinder their investment plans. With the current affordability crisis crippling the plans of millions of prospective and established investors across Australia, one has to ask themselves how we got into this situation and whether or not the Prime Minister and the Liberal party are making proactive steps towards fixing the current situation?
Property Club has witnessed first-hand the harm this government has caused to our members. While we are committed to supporting our members to achieve their investment dreams and create a comfortable lifestyle for themselves, the support also needs to come from those in power. Here are some of the key ways our current government has contributed to the affordability crisis, which plagues investors across the country.
Limiting Property Investors Australia has typically championed people to ‘have a go’ and dive into the property investment market. While the current government may outwardly stand by this sentiment, many of its decisions and policies over the last term have encouraged the opposite.
The common holding for property investors in this country is five properties. This provides an income stream for the investors to live a comfortable lifestyle and prepare financially for retirement. They don’t have to rely as heavily on getting a pension or superannuation.
However, the existing negative gearing policies in the budget have made it almost impossible for investors outside of the top income earners to buy any properties that aren’t brand new. Even though first home buyers are being encouraged to become investors, these decisions contribute to the market’s supply and demand balance becoming heavily skewed towards the latter.
The Move Away from Interest-Only Loan APRA has insisted that interest-only home loans be changed to principal and interest loans. Such an approach has not been adopted worldwide and has been strongly advised against by leading business and financial experts. An appreciating asset, such as a property, should be funded by interest only. If a change is made in this regard, then investors risk having their cash flow compromised.
In this reality, investors who have an investment portfolio of five properties will suddenly have their mortgage increase by an exponential amount. All of a sudden, all the hard work these people have put into establishing a strong financial position will be for naught. To find out more about variable and fixed interest home loans, read our article on this topic.
The Consequences of the Affordability Crisis The current affordability crisis has obvious dire consequences for property investors, home owners, and renters alike. The country’s property market desperately needs increased supply, and the only way to achieve this is to wind back these policies.
When more properties are accessible to more people, there will be less of a drain on the taxpayer, investors would return to existing properties while expanding their interests to other markets, tenants will enjoy far more living options, and we would avoid another major financial collapse that could have devastating consequences for all.
Stand Strong with Property Club While there is a lot of uncertainty in the government’s current position for property investors, you can be sure that Property Club will have your back every step of the way. Membership is free, and you will enjoy access to our nationwide resources and property mentors.
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