INVESTORS are coming back into the property market in Geelong’s northern suburbs after the financial regulator lifted a cap on interest-only lending.
The cap on the amount banks could lend via interest-only loans was introduced to cut the influence investors were having in rising markets, particularly Melbourne and Sydney.
But as the capital city markets declined in 2018, APRA lifted the cap in December.
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Harcourts, North Geelong agent Joe Grgic said since the cap lifted, there had been a steady increase in the level of inquiry, particularly from Melbourne and Sydney investors keen to get into the Geelong market.
Mr Grgic said buyers were keen on entry-level priced properties with a bigger land component.
The lower purchase price, backed with interest-only terms meant investors could secure neutrally geared properties where the rent paid the bills.
The bigger sites of 600sq m or more offered redevelopment potential, though most investors were happy to bank the capital growth.
“In certain markets where there had been strong interest from Sydney and Melbourne investors they’d almost disappeared last year,” Mr Grgic said.
“I wouldn’t say the floodgates had opened but there certainly has been more inquiry.
“For them it’s a property to buy and hold and, on average, in 10 years it will double (in value). If they maintain the property, there’s a good margin at the end when they sell.”
CoreLogic data shows more than 50 sales were recorded in Geelong’s north since the new year.
Mr Grgic said some cynical investors had missed out when they didn’t believe there was competition on a property.
Corio, North Geelong and Norlane have been some of the region’s best performing housing markets, with annual capital growth between 15 and 25 per cent.
Geelong manager for national valuation firm Herron Todd White, Mark Harmer said to expect mixed results across Geelong in 2019, although the city’s relative affordability compared to Melbourne would help drive the price-accessible sector.
Mr Harmer said some previously hot suburbs had stalled as prices pushed affordability limits, but he expected lower growth, not a correction like in Melbourne.