How excess equity could help you

After a few years of very little growth – indeed some declines in some areas – Australian property prices are on the move again – in fact the best property price research suggests that Australian house prices grew by 13% last year.

Meanwhile the share market has tanked.

My own assessment of the likely prognosis for the Australian economy is the same as the Reserve Bank’s and the Federal Treasury: there’s enough growth coming out of the newly emerging economies like China India and Brazil to mean that the economy will continue to do relatively well. And, though we will probably see some more increases in interest rates, the current American slowdown will relieve pressures on the RBA to lift rates further.

That means I think the Australian share market is already quite substantially oversold.

But the combination of these circumstances means that it is important to ensure that you are in a position to access any equity you have in your home or investment properties. Some people may need that equity to avoid a margin call on shares. If you do have a margin loan, it would be crazy to risk a margin call forcing you to sell into a bear market if you have equity you can draw on in your property investments.

And if this isn’t a concern for you, I can say that I personally am getting set to purchase some property (having been out of the market except for my own house for about five years). If you’ve got any additional equity, being able to write a cheque for a few thousand dollars to secure a property immediately it presents itself in the market is a smart thing to do.

So give us a ring and have a chat about your circumstances, and see what your options are. Visit our website or ring us on 1300 13 75 86.

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