Let’s talk about the $25,000 home builder grant and the renovation grant.
Interest rates are at a quarter of a per cent at the RBA. The cash rate is basically zero. From banks you can pick up interest rates around the low 2% mark. So all the stimulus packages appearing are putting a firecracker into the property market and it’s going to cause a boom.
We saw liquidity dry up in late 2017 with APRA putting a lot of measures in place. Property prices stalled in Sydney, Melbourne and Brisbane and we’ve seen 20% reductions in some markets. With the stimulus measures that begun in June 2019, I think we will see property markets recover and we are in the early days of a property boom.
So, who’s going to benefit the most from this?
A lot of for the $25,000 grant. As new properties rise in value, people will buy established properties, which will be cheaper by comparison and then those prices will rise too.
The banks will make money because more people will be taking out mortgages. The governments too, because of stamp duty being paid.
Then the investors already holding assets will make lots of money and I put my hand up to be one of those people to take advantage of the opportunity out there in the marketplace. I believe we’ve got an 18 month window of opportunity before we start seeing massive price gains.
Sitting on a gold mine
Look at the $25,000 home owner grant. Say you are the owner of a property already and it might have gone up by $50,000; well there’s a deposit for a second property. You buy a new property and then you go and pull out $25,000. That is then a deposit for a third property. So it’s a great opportunity.
Personally, I’m buying properties for below replacement costs, in capital cities, for $150-$300,000, because I know the cost of building those things now is going to be a hell of a lot more price.
Get your finance right
I’m a big advocate of getting your finance strategy right. That’s accumulating debt and paying it down over the next decade, because it’s going to be very important to capitalise on this once in a generation opportunity.
If you need help working out a strategy to take advantage of this market, contact us.