As we move through the 2nd quarter of 2016, it’s a good time to reflect on the performance of the property market around Australia as we now have sufficient sales data emerging for analysis on the market so far.
We should remember that buying property takes a longer term view and in the case of first time buyers, getting a foot on the property ladder is the most important step.
When you consider the typical home loan is generally taken out for the longer term, such as 25-30 years, the granular effect of what suburb, property-type or street to buy in is not as significant in the short term as actually getting started. When you overlay that with the price growth of property over sustained periods, the specific local or current market conditions tend to become absorbed over the longer period anyway.
I would characterise the current Australian property landscape as providing good opportunities for buyers, with median prices supporting a robust market, however with the benefit of a modest price correction from the recent high investor driven market.
So far in 2016, we have seen more of a convergence of the various property markets in Australia – with median price growth lowering in the stronger markets of Melbourne and Sydney, whilst the markets of Adelaide, Brisbane and Canberra have consolidated the positive results of the past year.
Sydney in particular, has felt the impact of lower prices but remains generally constrained by a chronic property shortage, which still characterises the local market as rising rents for houses and units over the past year continue. This general demand for rental accommodation is well ahead of supply and is consequently impacting on upward pressure on house rents across most capital cities.
Investor loans now account for 45.9% (Source: Australian Bureau of Statistics, February 2016) of all lending for residential property nationally. The New South Wales investor market share of that states local residential lending remains the highest of all the states at 51.8%
Australian Bureau of Statistics (ABS) data indicates that residential investor lending is now reviving and consolidating which reflects the continued strong underlying appetite by investors for residential property.
With the unemployment rate now under 6%, low interest rates from the RBA likely for the medium-long term and housing price growth set to remain moderate, the opportunity for home ownership remains positive.
Once again, property ownership should be considered over the longer term and making that first step may seem daunting at the time, but once you are in the market you have the additional potential to leverage that property growth over time.
Fundamentally, we have a situation where the investor is driving property sales on the strength of their rental returns from their tenants, potentially people just like you. Perhaps it’s time you paid your own place off, instead of theirs?
Good luck!
Select a topic to view more blogs and videos: