Australia is the to-go place for people who wish to live in a stable nation, offering great education, and a comfortable climate. Foreign investors, many from China, have flooded the market and real estate prices have reached record-breaking levels.
Worth mentioning is that Australia has never experienced a major decline and didn’t suffer much during the subprime crash 2008, when prices continued upwards. There are several interesting reasons behind this, of course.
In this article, I explain how Australia’s property market has performed in the past years and what the predictions are for 2019.
Australia’s Property Market in Previous Years
Australia’s property market was booming in 2016 to 2017 and we saw house prices breaking all-time high records. The millennials were even told to give up eating avocado toast if they ever wanted to afford a house.
According to Huffington Post Australia, the house price growth in recent years are related to:
- Investor activity in Sydney and Melbourne
- Low interest rates
- Tax incentives such as negative gearing and capital gains tax discounts
Theconversation.com has an illustrative chart that shows how housing prices have continuously been in decline, after hitting a peak in the 3rd quarter of 2017. It’s also the first annual decline since 2012.
A lower demand for homes and a tightening of lending to investors played a big role in the price falls according to the ABS Chief Economist, Bruce Hockman. Regulators have progressively clamped down risky lending, such as interest-only mortgages.
With around 40% of Australians having interest-only mortgages, it’s a wise choice. The banks have toughen-up previously lax expense and income verification. Continue reading Australia Property Market Outlook 2020: A Complete Overview