“All property slumps are temporary, while the long term increase in property values is permanent.”
You need to get past the fear-mongering headlines and gain an understanding of the factors that determine the health of the housing market.
The basic fundamentals that impact real estate are still very strong. These are unemployment, population growth, interest rates and of course availability of credit. The indicators from all the above are positive. Unemployment is the lowest it’s been for a number of years, population growth is strong, interest rates are historically very low and there is talk they may even fall further this year. High-interest rates make housing unaffordable whilst low-interest rates make it more affordable. A fall in interest rates will also further weaken the Australian dollar and this will become yet another driver as demand for property from expats and overseas buyers will rise.
So right now the fundamentals are not pointing to a collapse of the housing market as the sensationalistic headlines would have you believe. For a housing collapse, you want to see unemployment go higher and interest rates increasing, leading to distressed selling as loan arrears rise. Instead, the opposite is happening.
Another positive indicator for the housing market is rising rents which we are currently experiencing. Rents cannot be rising if the economy is about to collapse. Rising rents is a phase of the property cycle which sets the stage for the next upturn in property prices. But don’t expect prices to suddenly start going up. Property prices may remain flat or bounce up and down off the current levels for a little while.
This is a period of the property cycle that offers great opportunities, yet many buyers do not recognise this and will miss out in buying in this buyers’ market.
The time to buy and get set for the property boom that will eventually follow is now.
This article is featured in our Real Estate News Autumn 2019 Edition newsletter. Click here to download your copy.