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There have been a lot of talks about the Australian property market, both good and bad. If we believe all the headlines, we can see that the market is bouncing back after a fall, or even going further down to a crash! According the experts and economists, it’s not that simple to predict what exactly will happen.
So if you’re interested in getting a property yourself, you need to think ahead and learn more about the current property market. Read on as I talk about what you should know and look for in today’s Australian property market.
What to Know About Australia’s Property Market
Purchasing a property is a huge decision, whether it’s for your own use or a business. Before you put in a huge investment, there are things you need to consider, particularly in the property market of Australia! Here are the seven important facts to look into:
While the property market is now recovering over its price crash from the last two years, its prices remain expensive since the last decade!
According to surveys, the medium multiple of property prices to income is almost SIX times in Australia, bigger compared to US and UK. This is a pretty deep difference, and the prices can go higher depending on where you plan to purchase your property. For example, in Sydney the ratio is almost 12 times while in Melbourne, it’s almost 10 times.
The Market Is Diverse
The Australian property market goes deeper than just one whole country. There is a huge diversity between cities, economists say.
For instance, Darwin and Perth have experienced significant price falls throughout the last five years due to the end of the mining boom. However, in other areas, prices can rise depending on the overall economy within the area. That’s how diverse the country’s property market is, making it difficult to presume and predict anything.
Mortgage Stress Is Actually Overstated
There have been a lot of headlines regarding mortgage arrear rates at its highest ever since GFC. This can cause mortgage stress and a lot of misconceptions.
But actually, such headlines have been out for almost ten years now. Sure, housing affordability IS poor with household debt high. A few households are actually suffering from mortgage stress. BUT with that said, most borrowers can service their mortgage well.
It’s Chronically Undersupplied
Population growth means that Australia needs 75,000 more homes each year! However, the supply of homes hasn’t been able to keep up with the population surge and its quick pace.
This massive shortfall has built up the now driving high prices on homes. But now that there has been a surge in supplies since 2015, the price increases are being worked off. Take note though, this follows from over a decade of undersupply, which is why Australia still has expensive housings.
All House Prices Go Up AND Down
We’ve witnessed the prices of houses go up then down then up again for about 15 years! After a lot of episodes of price declines and increases, all ranging between 5-31% (depending on the area), it’s tough to claim how prices will be like in the next few months.
Experts do claim that, this year and in the near future, we shouldn’t be under the illusion that the prices will only go higher.
Housing Market Is Rate-Sensitive
The housing market prices will vary from city to city. Fortunately, RBA’s cash rate moves are currently helping with the rates.
While there are still people skeptics over the move, these current rate cuts really helped with the property market. It’s now a bit easier for home buyers to invest!
You Can’t Easily Forecast Price Crashes
During the last 15 years, many experts have claimed that there would be a crash in Australia’s property market. This is because of the expensive natures of Australian property and the higher debt levels.
But these factors do NOT indicate that there’s a crash waiting to happen. A national housing crash happens when there is an even higher unemployment rate, higher interest rates, or bigger oversupplies.
Wrapping It Up
The Australian property market is more complicated than what people portray it to be. With the many different predictions, you need to get your facts right! Prioritize learning more about the property market today before making a purchasing decision to ensure you get your money’s worth.
I hope that this article helped you learn more about the current property market in Australia. If you’re interested in making a property investment, check out the Brisbane Realestate Buyers Agent now.
Do you have any questions or want to share your own insights of Australia’s currently property market status? Share it in the comments down below, all your thoughts are much appreciated!