Be careful out there…

Property investors need to be especially cautious at a time when the old formulas no longer hold. For example, oversupply in some markets has done little to dampen rising house prices. In other markets, undersupply for renters is not raising rental rates. Cheap money abounds, yet banks are not making things as easy as they once did for established borrowers with plenty of equity.

These anomalies are becoming the new norm. Mismatches between regulatory and social settings don’t sit well with economic certainty. For example, we’re seeing banks fund reckless off-the-plan development schemes that scrape through the regulatory processes — yet the same banks refuse to finance buyers for these overvalued properties.

Compounding this is poor investment in public infrastructure to service these schemes — making them houses of cards on the brink of collapse. This has flow-on effects to all of us.

While we’re hearing about rising employment, we’re not hearing about reduced working-hours and casualisation of the workforce, and the potentially dangerous impacts this has on economic flow.

Amid all this uncertainty we have to exercise great care. Poorly-researched speculation can ruin investors’ lifetime prospects for security. On the other hand, property remains an attractive investment option so long as we’re rigorous in our research and prudent in our choices. Opportunities are more limited than they once were, but they’re still there for cautious investors willing to do the hard yards.

Until next week,

Jock Bing