Some basics for those entering the market.

For many decades, the Australian property market has roughly followed a seven to ten-year correction cycle, where prices rise and fall with supply and demand. Investor appetite to buy slows when a price drop is expected in the cycle, and correspondingly home owners are less interested in listing their homes for sale until a cycle is nearly run its course, to capitalize as much as possible on value growth.

Choosing the right time to buy depends on three things:

  • How long you want the search to take
  • What your budget allows
  • How much competition you’re comfortable with facing
house roof and sky

Key factors driving the Australian market:

  • The political uncertainty overseas and in Australia may affect supply and demand.
  • A generally low-interest rate environment means the banks are likely to restrict lending by raising lending rates, particularly for investors.
  • Slow economic growth reduces available capital in circulation which hurts illiquid assets like property.
  • While the overall national demand is high, local conditions can vary considerable across the country. New South Wales and Tasmania for example could fall in the range of in-demand markets, while Northern Territory and Western Australia could be facing relatively low demands.
  • While apartment markets overall were not oversupplied, Melbourne’s CBD and Brisbane’s CBD area have seen high levels of development which could lead to a probability of a price slow down or fall.
  • The median pricing continues to rise across all capital cities, with Perth and Darwin being exceptions. This has led to the drive for affordable housing to change trend. The central coast suburbs in New South Wales are getting more popular, the reason being home buyers from Sydney are looking for larger, and more affordable housing options.
  • The outer east side in Melbourne is also experiencing increasing interest from home buyers driven by the affordability of larger homes on bigger blocks.
  • The Gold coast, the inner-city Melbourne, and Sydney’s inner west are among the most popular areas in Australia for shared accommodation.
  • China and other Asian demand for property in Australia is likely to continue. Chinese developers and Chinese buyers are more and more linked to new apartment developments in the capital cities.

Investing in the property market in Australia can be tricky for prospective investors as the investment properties are in high demand and distort the home owner pricing cycle.

With property pricing fluctuations, the timing for choosing the property for long-term benefits takes experience and up-to-date market information to maximise the value.

Rod Mackay

Author Rod Mackay

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