Like many other highly developed countries, Australia has experienced huge surges in property prices since 2020. The Guardian has tracked a huge 16.8% rise in prices since midway through 2020; and now, with prices finally starting to flatten, there is hope on the horizon of some real stability in the housing market. With that, families and investors alike may be looking to procure some Australian property for their own portfolio or to live in. While prices flattening makes that an enticing prospect, it’s important to look at wider market factors to ensure you get the best deal.
While prices are staying steady, interest rates are, too. They are at historically low rates and the RBA has continued to keep the rates low, according to Reuters. However, with inflation now also coming down, there is the prospect of an interest rate rise on the horizon. With that can come a hit to homeowners on variable rate mortgages, and it can also give those looking to advance further up the property ladder pause for thought. With interest rates on the horizon, it can be inadvisable either to purchase new lines of credit or to extend current lines of credit. Indeed, paying off a loan could be beneficial right now given the prevailing market conditions – enjoying greater liquidity from the monthly income that frees up can help in getting a better deal in the future.
According to News.com.au, house building is a tougher process than it can appear on face value. Various buyers have been stung by schemes that have faltered, especially in 2020. House building is now starting to accelerate, however, given the huge pressures of the market, and the huge potential profits that can be gathered by the various real estate companies and builders. Prices should reduce on this basis, meaning that there’s more room for buyers to get in the market and make a foothold. Furthermore, wider macroeconomic changes are leaning towards the market becoming even more welcome to domestic buyers.
There are far greater opportunities for domestic buyers. ABC highlights the drop in foreign property purchases; approvals have fallen from a high of 40,000 in 15/16 to just 7,000 so far in 2021. Despite this, property prices have remained high, indicating that foreign investment was perhaps not the driver behind huge property price increases. That means, at the very least, the market is experiencing stability. You can be sure that the prices and rates currently being seen are reflective of the true nature of the market, and work to adapt to that.
Overall, the signs are good for the Australian market. High prices have deterred new buyers, but there’s a concerted effort from the authorities and the wider market to get things back into line and steadied. When that adjustment comes, buyers and sellers will be able to enjoy a healthy market that can stand on its own two feet.