The recent spike in house prices as led a lot of us to consider what does that mean for us?
This has different ramifications for each of us individually depending on our personal goals. Keep reading to find out how this can impact our financial plan and pro’s and pitfalls to consider.
As an economic stimulus measure to COVID19, banks have been given the green light to lend more readily. Coupled with a significant increase in the time spent at home recently, this has seen property prices skyrocket on the basis of higher turnover and greater demand for lifestyle focused homes.
So, what is really happening?
– Increase to property owners’ wealth,
– Significantly increased accessibility to secured debt,
– More financial planning choices for all,
– Even harder for first home buyers to get in the market,
– Scams are exploding
As property prices soar across the country, emotion builds as those who have an exposure to this asset class experience passive gains. The gap between the ‘haves’ and ‘have nots’ widens leaving those with limited exposure to the property market left to wonder how they can be a part of this event or have they just missed out.
FOMO sets in and the greatest motivator becomes a part of thought patterns – greed.
The banks come to party with their willingness to lend on the increases in valuations and their new post COVID lending criteria, further pushing the market into bubble territory on the back of record new loans.
Choices become overwhelming. Should we access the debt being offered by the banks? Do we invest in property in a high market? Can the increase in valuations improve our lifestyle today? When choices are many, selecting the right one for us is even harder.
Then there are the first home buyers. These poor souls must deal with the most unaffordable and competitive housing market of all time. Having a clear and pragmatic view of the future is challenging when it becomes continually harder to achieve.
As complexity of choice increases so do those who seek to take advantage of the confusion. Unscrupulous sales tactics and scams unfortunately increase significantly during these times where uncertainty has us believing those who promise the impossible dream and we let our guard down to the real risks of the world.
No matter the market conditions, clear goals based financial planning decisions will enable you to be comfortable with whatever journey you pursue. We know that maintaining our focus on our long goals is challenging during times of continual change, as we find the risk and return balance skews us towards the short term. Find your happiness and avoid misfortune with a financial planner.