The Australian real estate market is affected by the current coronavirus pandemic but the impact is not necessarily what many think. There are different housing markets and sectors of the economy that will be affected more while the same will not apply with others.
It is difficult to figure out the exact long term impact on the Australian real estate market but we can talk about what is going to surely impact this evolution. This is why we need to consider the following.
The population growth in Australia is around 360,000 people every year. This means that around 175,000 new homes have to be built every single year. Around 60% of this growth depends on immigration. Due to this, short-term population expansion will be much lower. After the restrictions will be removed, this will increase again since overseas immigrants will be able to go to the country again.
A Declining Housing Supply
In many areas around the country, there is a shortage of new large real estate projects planned. It does take a long time to build larger apartment complexes or any new estate so there will be an undersupply of properties that are well-located. This is something that should last around 1 year or 2 years.
Low Interest Rates
The current low interest rate environment makes it much easier to buy a house. This is true for both investors and those that look for affordable property for sale in Canberra. Because of the lower interest rates, it is very cheap for the investors to buy real estate properties. Also, out-of-pocket expenses stand out as being among the lowest ever.
Growing Popularity For Smaller Households
There are a lot of people that live in normal multigenerational households. Even so, soon we will see Millennials that will move out and they actually make up 1 third of the entire property market. Households will most likely be smaller though.
It is expected that around 40% of the Australian population will become renters soon. This is partially because of affordability problems but also because of the appeal of different lifestyles. There is no official accommodation offered by the government so everything revolves around property investors.
The First Home Buyers
In Australia, first home buyers are making a huge comeback. This did happen in part because the government has a new scheme out to support it. At the same time, it is because of the opportunity of cheap financing and the rising property values.
When comparing with established homebuyers that practically need to trade in on an increased value, the first home buyers just get into the real estate market and now see that everything moves much faster than it used to. This fast movement means that many first home buyers think that they can cash out faster so they get involved.
Strong Underlying Fundamentals
This is particularly important when we look at the Australian real estate market. The economy is affected and the share market stands out as highly volatile. Even so, the property markets are now underpinned since 70 percent of the property owners are interested in long-term ownership. They will not sell the home.
Another thing we need to understand is that the banking system in Australia is stable, sound, and strong. Some home buyers are overcommitted from a financial point of view. However, there is no concern about debts since usually home owners can actually afford it.
Mortgage defaults are now at a low rate. This means mortgage rates are not likely to increase. The community is interested in the impact of COVID-19, but there is no worry at the moment that long-term damage will happen.
Should You Consider Buying Real Estate Property In Australia Now?
Because of the fact that competition and property prices are falling away, the answer to this question can only be positive. However, this is only possible in the event that your real estate investment is done while you remain financially secure.
Whenever you make such an investment, you have to think about the long term. This is always more important than short-terms. Property fundamentals right now in Australia are very strong. This includes demographics, affordability, local economic trends, availability finance, and supply and demand.