Education rather than intervention is the best way to create a more sustainable property investment industry according to the Property Investment Professionals of Australia (PIPA).
PIPA chairperson Ben Kingsley believes governments and bodies such as the Australian Prudential Regulation Authority (APRA) and the Australian Securities & Investment Commission (ASIC) should help investors to make informed decisions, rather than rely on measures like APRA’s recent actions to keep the property market under control.
APRA last month expressed to lenders that they should rein in the amount of finance they are providing to investors, which has resulted in some of the country’s biggest banks instituting measures such as stricter loan to value ratios or cutting discounts offered to investors.
“While we welcome and endorse a responsible approach to lending, we are concerned about APRA’s market intervention and don’t believe their lender-by-lender approach is the most effective means to control the property market,” Kingsley said.
“Not every property makes a sound property investment and in this upswing cycle there will be many who will lose money.
“We need to teach Australians about this as well as encourage them to seek professional investment advice to limit this from happening.”
But Cam McLellan, chief executive officer of property investment strategy company Open Wealth Creation, believes APRA’s measures are somewhat of a necessary evil.
“We’ve probably got the most regulated lending system in the world, which is why we didn’t have the collapse like America did during the GFC,” McLellan said.
“At the moment there are still banks and lenders that are open for borrowing, there might be a few more restrictions on it but if that means investors might have to save a bit more money, then I’d rather that than end up in a situation like America.
“It’s all well and good to say go and get education, but is that just from some unregulated property course?
“The best education I think a potential investor could get would be sitting down with a group of successful investors and asking talking to them about how they do their business.”
4 June 2015
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