Property is the currency of the rich

After making this bold statement last week: the harder it is to get into property (real or ‘perceived’ – confidence), the more money people with property will make, new data released this week has further cemented our commitment to this statement and the opportunity that lies ahead for those who can invest in property.

The challenge in acquiring property by those who don’t already have property or a wealthy background has been thrown into the spotlight as ANZ CEO Shayne Elliott this week said home loans are “only for the rich”. His reasoning for this was due to lending regulations making it harder to secure loans and credit cards.

Side note: while we do agree with the statement, it seems a little ironic that it’s come from the CEO of a company that has just unveiled a profit of more than $7 billion for 2023 along with record profits from many other major banks.

For people renting and hoping to buy a home to live in, the possibility of this goal coming to fruition is declining with each change to regulations, the growing imbalance of wages and rent/rate rises and the increased cost of living moving the goal posts and reducing the capacity to save for a deposit.

It’s also baffling why current finance structures are set to dissuade or penalise property investors from entering the market when they are they are so desperately needed to house those who can’t or won’t buy property.

While the mortgage landscape continues to get muddier, what we’re seeing on the rental side is just as much pain. According to the annual National Shelter-SGS Economics and Planning Rental Affordability Index that has just been released, regional Queensland is the most unaffordable place to rent a home, with some Sunshine Coast residents spending up to 60 per cent of their income on rent.

Growing demand for housing coupled with multiple constraints to provide such volumes of housing pushes prices up in an economy that is already seeing an uncomfortable cost of living and dramatic but irrelevant responses by macroprudential regulators making matters worse. If you have a property the value and rents should continue to rise because of the market conditions which reinforces our first point above.

There’s a lot of financial pain, yes, but let’s not gloss over the fact that there is physical and emotional pain connected to this boiling pot of a disaster and there is social unrest bubbling under the surface. There needs to be change and as we’ve said many times over, investors and developers can be the solution, not the enemy, if those with the power to cut red tape have the courage to change the course of the future.

While securing a mortgage and building a home presents challenges for many, there are ways to leverage current financial structures to unlock finance opportunities to see more people able to invest than they thought possible. Plus, with our recommended strategic changes to improve the current broken system, investors could help house more of the community, reduce rental stress and secure futures for many families including their own.

This is the change we’re calling for:

• The Australian Prudential Regulation Authority (APRA) to drop their assessment rates for qualifying mortgages. The current floor rate they use is overkill and knocking out too many people who could afford to repay a mortgage.
• Interest rates for investors should be the same as owner-occupiers, or lower, to make rents more affordable.
• Drop the stamp duty for investors to see more of them in the market providing more rental accommodation. Stop changing policy!
• Stop increasing tenants’ rights at the expense of owners’ rights because this is not justice, it’s discrimination. All forms of discrimination should be illegal. Plus, this action actually hurts the people they are trying to help because by disincentivising investors, more leave the market and fewer rental homes are available making it even more difficult and expensive for renters.
• Stop Councils from charging higher rates on investment properties over owner-occupied properties as this just pushes rents up or disincentivises investors from entering or remaining in the market. The rates don’t have to be discounted, they should just be the same because they require the same service from their Council, no more.

Really, there needs to be an overhaul for the funding of investment properties, execution and application of the planning scheme among others. For now, just fix the things that are causing homelessness – the APRA assessment rate and barriers to investors being able to do more.

In the last 27 years that it’s been around the monetary policy structure and settings have proven to be a failed system. There are better ways to apply monetary policy and we need a body to ensure monetary and fiscal policy work together or we’ll never see interest rates at sustainable levels.

To help us drive these changes through the channels that have the power to enforce them, please show your support by taking 15 seconds to complete the form at www.homesforeveryone.com.au

Now, more than ever, more property is the answer … to your personal need and wealth and to the desperately growing need in the community. Buy a home, secure your future, help a family. Talk to our property coaches to learn what’s possible for you now and into the future.