Residential property buyers beware in 2019: RiskWise
Tighter lending standards, the results of the Banking Royal Commission, potential changes to negative gearing and capital gains tax and unit oversupply are some of the major risks that will shape the residential property market in the coming years, according to RiskWise Property Research.
Chief executive, Doron Peleg, said it was more important than ever to identify the red flags when it comes buying property.
“There’s every chance the Australian Labor Party (ALP) will win this year’s Federal election and implement changes to negative gearing and capital gains tax. In fact, we have already seen an impact on the market due to uncertainty and fear about these changes, with price reductions accelerating following the Liberal leadership spill of Malcom Turnbull by Scott Morrison. In addition, auction clearance rates have dropped below 50 per cent in both Sydney and Melbourne,” he said.
Peleg said buyers should also avoid risks like poor economic growth, as seen in Perth and South Australia, and high vacancy rates, and warned that areas with a large number of dwellings and building approvals in the pipeline were highly likely to underperform the market.
“There is a high possibility the value of an off-the-plan property may decrease between the original contract date and settlement,” warned Peleg. “This will result in capital loss, as the equity in the home could be reduced.”
Brisbane City, Fortitude Valley and South Brisbane were named in the top 10 of RiskWise’s 2018 100 Worst Off-The-Plan suburbs in Australia, as were Zetland and Epping in Sydney and Southbank in Melbourne.
Peleg urged buyers to look for dwellings suitable for families with three bedrooms, parking close to schools and transport hubs.
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