According to CoreLogic’s latest release, the national rental index increased 1.9% during the September quarter, decreasing slightly compared to a 2.1% gain…
Australian property prices may have peaked
Higher interest rates, tougher lending regulations, and growing supply have contributed to an increasingly negative attitude in the real estate market in Australia.
Some economists and banks predicted that Australian property prices could drop excess of 20%, but just have a look at track records – they have kept predicting this every year and they’ve been wrong.
Experts indicated property owners should plan for a price drop if the Reserve Bank of Australia raises interest rates, as it is argued that property market will function similarly to other investment markets, in Cycles, however, it is vital to remember that residential properties are supported by long-term ownership, it therefore has a buttress against sudden drops.
Although a spike in housing prices has been witnessed over the past 18 months, the market’s wheels will continue to revolve, ultimately driving prices into a new peak when it hits an adjustment phase.
Property Market Outlook
Australian big four banks have recently decided to hike up its fixed home loan rates, moving from 0.25% to 0.4%, and is predicted to reach the rate of 4-5% in the next 5 years. Experts warned the days ultra-low property financing are slowly ended.
Having said that, in the short term, property investors should therefore prepare for sufficient capability against future interest rate rises by raising cash reserves and solid equity within their properties.
On the other hand, housing prices are currently surging around Australia, auction clearance rates remain high, and the media keeps telling investors that we’re in a property boom.
Property market is driven by many factors, mainly interest rates, economic growth, consumer confidence and supply and demand ratio.
Value of houses and townhouses in decent suburbs will continue to rise whether the demand is affected during the pandemic. Nevertheless, certain segments of the market will suffer to remain unsold and untenanted, particularly city apartment towers and accommodation around universities, as they strongly rely on students, tourists (Airbnb) and overseas arrivals.
There are several real estate markets across Australia, generally the market will grow strongly across the country.
Buying Properties During Market Dips?
Considering the positive aspect, people who have limited finance are more likely to approach the market when it’s cooled down. Despite the fact that prices will not get back to rate before it surges, potential home buyers will have more space to join the market and prevent it from running away from them again.
In the early 1990s, investors who took the risk to invest in properties and believed that the negativity of price fall is just short-term, would be richly rewarded because simply the market cycle always move to the next phase of expansion after a cooling period.
So yes, the market might fluctuate, but it will not change the fact that it will move in cycle and will reach a new growing mark in the long run.