Investor growth must slow to avoid trouble later on: Richard Wakelin

Property investors have enjoyed a remarkable period of generational lows for interest rates, Melbourne buyers advocate Richard Wakelin says.

"One that will not remain indefinitely," he told The Australian Financial Review.

He suggests the recent move to raise rates was delivered with plenty of guidance from regulators that investor growth must slow to avoid trouble later on.

"Yet some participants' sense of entitlement is so ingrained that even a small and well-explained tweak up in rates causes apoplexy.

"I'm not uncomfortable that rates are now higher for investors than for home buyers. 

"Traditionally, it was always the case that investors paid more than home owners because, all things being equal, an investor is the higher risk. 

"If you're in financial trouble you'll make more of an effort to hang on to the family home than your investment property."

Richard Wakelin says one of the biggest risks in a property market sitting atop strong sustained capital growth "was a loss of discernment."

"Good judgment is put to one side and every property looks like a winner.

"A rising tide lifts all boats, and all that. It is a time when we see the brazen spruikers and con artists emerge, pushing up prices for junk assets.

"It only takes a mild softening in the wider market for the value of these peripheral properties to collapse, causing financial havoc for many families."

RICHARD WAKELIN is the director and founder of Wakelin Property Advisory.

Richard is hosting a webinar on how to prepare to sell your home or investment property this spring at 8pm Wednesday, August 12. You can sign up here.