The CEO of an Australian mortgage lender says confidence among property investors has been rocked by tougher lending restrictions and uncertainty about negative gearing.
Mortgage Ezy CEO Peter James told The Adviser that the continuously shifting lending landscape has significantly impacted sentiment, with property investors becoming increasingly hesitant about entering the market.
“The investor market has really been stopped by a number of colliding issues all at once,” Mr James said.
“You’ve obviously had the tightening of serviceability, combined with the rate hikes and even bans on investor lending by some skittish lenders. What that’s done is knocked the confidence of an investor.
“We need to look at the psyche of an investor. They don’t invest in housing for any other reason but to make a profit and [all of the changes] have freaked them out.”
Mr James said the current debate surrounding negative gearing has also made investors wary.
“You’ve got both sides of the political spectrum talking about negative gearing issues,” he said.
“Whether the liberals impose negative gearing or not, they’re still ambiguous... ‘well, we may impose it to corporates’ or ‘we may impose it to superannuation funds’ and perhaps even more, but what they have ruled out is individuals, which is certainly welcomed, but they haven’t ruled out capital gains decrease of the concessions.
“Labor, on the other hand, has clearly said it’s going to punch them in the guts both through negative gearing and capital gains.
“The last time we had one of those policy changes, the market stopped dead. Now we’ve got two, now we’ve got both parties mooting for it and on the back of what’s happened already with investment, the problem is that these individuals may take advantage of any honeymoon or grandfathering for a short period of time but we can already see that they’re incredibly nervous in the market.”
Mr James said the negative gearing debate, coupled with the banks’ pricing and policy changes, have led to a “chaotic” environment for the investors.
“If you have something organised and one policy changes that’s one thing, but when you’ve got lenders all imposing different policy and pricing changes, all to different degrees and separately, it becomes chaotic,” he said.
“The problem that we've got is that it's a shifting landscape continuously and for long-term investments there has to be confidence in long-term policies and there hasn't been now for six months.”