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Current State of Australian Housing Market

— January 2, 2019

The Australian housing market is facing some serious challenges. However, there are some signs of improvement.

At the moment, the state of the Australian housing market is on a downward spiral, with some suggesting that things could get much worse in the future. On the other hand, there are those who don’t have the same outtake on this same situation. According to some, this could still turn out for the best, especially due to the fact that the same situation that spells disaster for some, may end up being quite beneficial for others. With that in mind, here are several ways in which this could turn out good or bad in the nearest future.

The Positive Sides

Even though the current state of the housing market in Australia may not look as optimistic, there are still a couple of factors to consider. First of all, the global economy is currently strengthening, which is always closely intertwined with the real estate market. Second, local employment is currently at a high level, which means that more and more people might dare to become homeowners in the near future. In other words, a strong economy and a stable local employment market may lead to more optimism amongst the potential homeowners. Combined with economic growth in Australia (3.4 percent in the June quarter) what you get is a reason for this trend to take a drastic turn for the better.

Keep in mind though, that this higher demand might make prices rise. This means that if you aim to buy, now might be the time, while the prices are still going down. This is especially true for a residential home. Still, those who want to move or become homeowners for the first time are much better off asking local real estate professionals. For instance, veteran Sydney agents are the party you should contact about purchasing property in the NSW area.

Investors vs. Homeowners

The next thing you need to understand is the fact that there are two types of people buying residential properties: investors and homeowners. While homeowners are mostly affected by unemployment (something we’ve already addressed), investors are most concerned with the market and a total value. This is due to their vastly different look at the market. You see, when one purchases a family home, they’re settled there for good. This means that the fact that the prices of houses might go up or down in the future and it will only cause a small amount of regret (that they’ve bought too soon) or relief (that they haven’t waited for too long).

Aerial view of a neighborhood; image by chuttersnap, via
Aerial view of a neighborhood; image by chuttersnap, via

While investors might bail as soon as things go south, homeowners will stick by their investment no matter what. This means that one of these groups represents the stabilizing while the other represents the volatile factor of this market. The share that each of these groups has in the market may determine the stability. The problem lies in the fact that homeownership amongst Australian millennials isn’t at a

satisfactory level. Nonetheless, investors are mostly split amongst residential and commercial real estate.

Foreign Investors

Previously, we discussed the importance of investors in this field and due to the fact that Chinese investors are currently flooding the market, things have suddenly taken a turn for the worse. This is both for existing and new homes. About 10 percent of new homes and 5 percent of existing ones are now in the hands of foreign investors, making them a bigger and bigger influence on the market. The problem with this particular trend lies in the fact that it seems as if it’s waning. This has caused prices to take a sudden turn southwards.

The last thing you need to keep in mind is the fact that with the current state of the real estate market, both of the above-listed eventualities are possible. However, buying a residential home and investing in real estate are not the same thing. Moreover, the Australian real estate market has always bounced back in the past, even if the movement of value is completely unpredictable. In other words, while things may seem a bit grim at the moment, there are certainly some strong indicators out there that things might take a turn for the better in the near future

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