Those planning to invest in the Australian property market in 2019 definitely have more than enough reason for alarm, yet, not everything is as grim as it looks. Compared to the rest of the first world countries, the trend of home ownership in Australia is still on the rise and there are some indicators that the demand for housing (in certain regions of the country) may be revamped. The problem, nonetheless, lies in the fact that the prices are currently going down, which may disrupt your investment plans in the nearest future. With that in mind, here are several things you need to know about the Australian property market in 2019.
1. The global economy is affecting the property market
The first thing you need to understand is the fact that in comparison with the global economy, which is affected by China/U.S. trade war, the Australian market is fairly stable. This prolonged stability usually leads to a drop in both rental and housing prices which is a factor that everyone who plans to invest in the property market needs to consider. The question that comes from this, nonetheless, is far more important – can Australia’s economy stay strong and for how long? At the moment, Australian trade surpluses seem to be handling this situation in a safe and reliable way but the foreign investment in the housing sector is on a steady drop for a while now.
2. Foreign investors are pulling out
Perhaps the most important factor of all is the fact that the foreign investors are quickly pulling out of the scene which, indeed, leaves some room for a potential disaster down the line. The situation is, in fact, so alarming that Australia’s housing market has recently been warned by the Swiss Bank UBS, a warning that should never be taken too lightly. Needless to say, this is not a sudden occurrence but a continuous trend that started at the end of 2017 and is on the same path ever since.
3. Great interest in property ownership
One of the factors that affect the Australian property market the most is the interest that the local populace is showing in home-ownership. While there are some claims about millennials in first world countries not being encouraged to become homeowners, Australia seems to be an exception to this rule. In fact, about 60 percent of all bank loans in Australia (about $1.51 trillion of mortgage loans) are currently in residential properties. Needless to say, this is the single greatest proportion in developed countries, which also goes to indicate that Australians are indeed interested in owning a property of their own.
4. Local activity is also indicative of the price development
Another thing you need to understand is the fact that the activity in a certain area may also be an indicator of the future of the housing market. You see, a region that offers a wide array of employment opportunities, a suitable market for aspiring entrepreneurs or just a series of interesting events and social occurrences may see an increased interest with local homeowners. Residential property is always closely tied to one’s lifestyle, which is why all the events that are tied to its matter.
For instance, when trying to figure out which areas of Queensland are going to see a surge in property market investments, one needs to look at these areas individually and check the calendar for the following year. So, let’s say you’re looking at the property located on the Sunshine Coast. In that particular scenario, it might be worth your while to check out what’s on Sunshine Coast in the nearest future, in order to try and predict the future development of the market.
5. Western Australia might be looking up
Previously, we’ve discussed the importance of job opportunities for the local housing and rental markets, well, at the moment, Western Australia is under massive development. In fact, there is about $130 billion of major projects taking place there, mostly revolving around mining, oil and gas jobs. Nevertheless, this alone is bound to kick-start a massive expansion of residential properties in the area, as a result of increasing demand for housing. A more numerous workforce needs more accommodation, not to mention that it’s usually far more financially potent.
Previously, we’ve discussed the falling prices of Australian houses and, truth be told, prices are going down quicker only in China and Russia. This means that, as an investment option, now might not be the right time to get interested in real estate. Still, there’s nothing to prevent you from planning, anticipating and preparing for the future. After all, there are a few indicators that things might soon take a turn for the better.
By Diana Smith