Well it had to happen. All the negative sentiment in the media for the past 5 years decrying a property slump in the face of ever rising prices, the pundits are now leaping with joy they were right.

That along with changes to public policy around lending, on capital reserves and risk profiles, has visibly tightened credit availability. While some would say that’s a good thing, working at the face of property sales, I can tell you for the most part it isn’t.

And then we had the Royal Commission we had to have. Banks have been caught with their pants down breaking their own risk rules, screwing over clients with fees, and presenting rubbery figures of their own.

The seriousness of the impact this is having/will have on the property market has yet to come to the fore, but it has me worried.

I’m not the worrying kind.

In one week I had 2 contracts fall over due to finance. And I had 2 other offers withdrawn because on talking to their bank subsequent to completing an offer, buyers had to withdraw as they would not be able to obtain finance.

Of the 2 contracts that we’re terminated under finance clause, both buyers had pre-approval, were borrowing within their limits.

Both had to extend the finance clause from 2 to 3 weeks, and then 4 weeks.

In case 1, the buyers are an Australian couple, husband works in London and they were including his income in application as it is more than hers, to purchase a holiday unit. Pre-approved with bank on this information. Ultimately rejected as government policy now prohibits banks from lending on foreign income. Buyers could have obtained finance via broker but have relationship with bank they wanted to maintain so contract terminated.

In case 2, between pre-approval and submitting formal application - a difference of 4 weeks, bank had changed its lending criteria for buyers of that age. Despite having several million dollars in property assets owned outright, bank requirements with regard to income to service the loan changed. Despite their income not changing, despite having pre-approval based on that income, they no longer have sufficient income in the eyes of the bank to take the mortgage.

In both cases as the contracts began to unravel I spoke to brokers I respect and was advised that the policy restrictions on the banks have increased so dramatically and quickly, what they could do a few months ago, they can’t today. Hence in some cases the changes occurred between pre-approval and application submission.

For example, lending on foreign income is today restricted because of government policy resulting from Chinese buyers of Sydney units.

While I understand the intent - it is the law of unintended consequences that always has the greater impact.

The issue of foreign income is relevant to me because I deal with a lot of Australian expats buying in Noosa. The brokers advise that their usual go-to banks can no longer lend on foreign income.

But the broker has a panel of 50 lenders and at least 3 non-bank lenders can accommodate the circumstances of Australian expats. Unfortunately, my buyers in this case were unwilling to deviate from their bank.

Takeaway:

The rules have changed. Deposit requirements particularly have changed especially around age. 20% will become the norm.

Four week-finance clauses will become the norm. A month ago we were still writing 14-day finance clauses without issue. We will never be able to again.

Do not put your faith in your local bank. Sure, apply through the bank if you feel you have a relationship and mutual loyalty, but please ALSO talk to a good broker. Get a second opinion, have a plan B in place. I have several brokers I recommend - not because I get a kick-back (I don’t take kick-backs on anything) but because they have proven themselves time and again. Happy to pass on their details regardless of whether you buy through me or not.

Restrictive public policy to shape the purchases of one specific demographic or buying situation, is having and will have extensive unintended consequences. With property being one of our largest employers, a constant of the Australian economy, it is a dangerous path we are on in terms of increasing regulation across multiple fronts at the same time. Public policy has every chance of killing the golden goose that property is to public coffers. Especially if the federal government changes at the next election...

Whatever you are thinking about doing with regard to property purchases or sales in the future, do it now. Don’t wait.

Having said all that, whilst the government and compliant media have succeeded in beating consumer confidence and sale prices in Sydney and Melbourne down, they remain on an upward trajectory here in Noosa, and will continue to rise for reasons stated in previous articles time and again.

Ours is a positive tourism-driven story and we have a few more years yet of capital growth to come.

So there is no better time to buy than now. But please get your finance approval sorted before you start looking!

Featured property: 60 Sea Eagle Drive, Noosaville

3 bed, 2 bath, 2 car

This simple low maintenance house in the sought after Doonella estate is your perfect entry to the Noosa property market.

White tiled floor, brand new carpet in bedrooms, large windows and the perfect aspect makes this an idea retiree, young family or investment option.

On a level block directly across the road from schools, it is comfortable, conveniently located and quiet. With limited street parking in the area, you will appreciate the additional flat on-property parking to the side of the driveway and the street car park directly out front.

You will spend most of your time in the north facing alfresco area in a fully fenced back yard that boasts privacy, plenty of room for a pool and side access for boat or caravan.

For the green thumbs, there is a designated vege garden area and garden shed awaiting your inspiration.

Less than 100m to Noosaville primary & St Teresa’s Catholic College, and an easy flat walk to the local bakery, general store, bottle shop, Thai and Indian restaurants, you are ideally located to reach Gympie Terrace by car in 4 minutes, Civic shopping mall in 3 minutes and Bunnings, the gym or Officeworks in just 2 minutes.

A mixed demographic of young families and retirees and a variety of home styles make this a very liveable and likeable neighbourhood.

Enjoy family walks or cycling with multiple tracks through the forested reserves and parks that are the hallmark of this estate.

Link: https://www.noosa4sale.com.au/property/60-sea-eagle-drive-noosaville-qld-4566/

Features:

* 3 kW solar power * Air-con in living zone * Ceiling fans throughout * 10,000 litres rainwater storage * Covered patio to private fenced back yard * Double gate side access for boat or caravan * Additional parking