The real estate market in Australia has experienced ups and downs in the past few decades. But in the last 5 years, the market has undergone changes from time to time. Today we’re looking at some of the property trends in Australia in 2017.
Gradual Increase in Property Prices
The real estate market in Australia was very fragmented last year. Even the sub-markets in every state experienced that.
- Melbourne and Sydney outperformed other states as villas and well-located houses did better than apartments. The same trend is likely to continue in these states this year, but there will be slower growth in the national property market.
- Housing prices will continue to increase at a higher rate than apartments. But there has been a change in preferences with the majority of people wanting to work near their home, which means medium to high-density areas are preferred. Despite that, the demand for apartments is still not as high as it is for houses, because they are not user-friendly and do not always meet the needs of new occupiers.
Debate on Housing Prices Continues
There is always ongoing talk about housing affordability. New families find it hard to save enough money that allows them to enter the real estate market, and will continue to rent based on their lifestyle preferences.
Rising Interest Rates
The decreasing inflation rate would keep interest rates low. However, financial institutions might increase the rate due to the following reasons:
- High funding costs
- High exposure of some banks in mortgage lending
The apartment market in the central business districts of Perth, Brisbane, and Melbourne is exposed to risk. A significant number of apartments are about to reach the completion stage during times where foreign investors are struggling to complete their property purchases. This may result in fallout due to the following reasons:
- Tighter lending policies of financial institutions for local investors who wish to invest in the new inner city apartments
- No lending to expats and foreign investors at a time when the value of completed apartments is below the contract price
Relatively fewer Properties for Sale
Relatively fewer properties are for sale in 2017 compared to 2016, because homeowners want to renovate instead of buying a house, to save money. Whereas, baby boomers who have planned to downsize to townhouses or apartments in the hope of saving money may postpone their decision. This is due to the cost of medium density residential areas increasing.
Rising Demand by Foreign Investors
The demand for Australian property by foreign investors will continue to increase. Chinese investors, in particular, are looking for investment opportunities in relatively safe places due to the uncertain market conditions in the UK or USA. Therefore, as a result, this might further trigger the demand.
Uncertainty in Global Politics
The global political situation has also taken an unexpected shift in the past 12 months. This has caused tension in the world market. Keeping these factors in mind, the current year will continue to bring interesting changes in the real estate market. However, if you look at the trends in the past few years, understand the media and political uncertainty, this has only created noise and did not have any major impact. Investors who followed a long-term approach have still made good money on investment properties.
In spite of that, investors must be careful, because there are some property types that may not experience an increase in value.
Speak to Hunter Galloway to help you analyse the market efficiently and make the right decision at the right time. Call us now on 1300 088 065 or email Nathan at Nathan.Vecchio@HunterGalloway.com.au