Australia’s property market is showing signs of life…
The worst of Australia’s property market downturn appears to be over as growth drivers all lined up, buoying both buyers and sellers in the country.
Recent data shows that housing prices are finally stabilising with five of the eight capitals recording a slight rise in value. Sydney and Melbourne are leading this turnaround.
Real estate economists have offered theories on why the property market is making a comeback this year. There are at least 10 factors driving the property market forward.
Factors Driving Property Market Growth
- Increased confidence in the government following the Federal election
- APRA’s change in loan assessment criteria. Banks changing home loan rules will mean mortgages will be easier to get. It will also allow people to borrow more and buy a bigger property.
- RBA’s interest rate cuts in two successions and the possibility of more to come
- Tax cuts and the prospect of having more disposable income
- First Home Loan Deposit Scheme. Only 5% deposit to get a home loan.
- The best housing affordability nationally since 2016.
- ATO’s first home super saver scheme. First home buyer millennials realising they can use their superannuation fund to buy a home.
- Short supply of detached dwellings
- Positive messages in the media stoking consumer confidence
- The widespread fear of missing out (FOMO)– yes, it’s a thing
The upward movement will probably continue as positive media messages coupled with the fear of missing out (FOMO) on buying a property at a time when getting into the market seems perfect.
Though these factors will affect supply and demand and may make getting into the property market difficult for buyers, research by CoreLogic shows the recovery has yet to affect house market values.
CoreLogic’s head of research Tim Lawless said, “Despite an unprecedented amount of new apartment stock entering the market, Sydney and Melbourne unit values have consistently outperformed the detached housing sector through the downturn, and this trend is continuing into the recovery phase.”
And then there’s the investor segment. Apparently, Internet searches for investor loans went up, doubling its previous weekly volume after the June rate cut.
“The doubling of traffic is definitely a significant result there – the interesting thing will be to see whether it has any result in the market,” Finder insights manager Graham Cooke said.
“What we’ll see in six to eight to 10 weeks’ time is competition between a first-home buyer market and the investor market, in the sub-$600,000 to $750,000 market,” he said.
And he may just be right.
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