Australia Property Market Forecast
Australia's property market is going through a tough time. Property prices have been falling for almost seven years now, and this decline has accelerated in recent months. The combination of falling prices, rising unemployment and low wage growth has caused many households across Australia to experience mortgage stress and even lose their homes. This article will take you through the current state of Australia's property market and explain why it is experiencing such difficulties at present.
Falling prices in capital cities
Sydney has seen the largest drop in house prices, with the median level of properties down 10% from its peak. Melbourne’s house prices have fallen by 6%, Brisbane by 4%, Adelaide by 4% and Perth by 3%.
Falling unit prices
Melbourne unit prices have fallen by 4.3% since the start of this year and have been down by 8.5% since the start of 2017.
In Sydney, prices have been down by 10.9% since the start of 2016.
Interest rates
The interest rate is the rate at which a bank will lend money to you, and it can have a significant impact on your property investment. At the moment, interest rates are low. However, they're expected to rise in future years. This will make it more expensive for you to borrow money and thus potentially negatively affect property prices.
However, even if interest rates increase in the future (which they inevitably will), they may not increase by very much or for very long before falling again as happened in 2017 when they peaked at 3% and then fell back down again within 6 months due to uncertainty surrounding Brexit negotiations (and perhaps also due to some good old-fashioned Australian pessimism).
Rising unemployment
The country's unemployment rate is 5.2%, which is the highest in Queensland and lowest in Tasmania. The unemployment rate for 15-19 year olds is 13.9%; meanwhile, it's 3.1% for 55-64 year olds and 5% among those aged 55+.
Mortgage stress for households
Under pressure
Households are under pressure. Interest rates have risen, house prices are falling and unemployment is rising, with the cost of living increasing as well.
Unemployment is high at 10% and expected to rise further before it stabilises over the next few years. Unemployment is expected to increase from its current level before levelling out later this decade.
Low wage growth
You could be forgiven for thinking that wages have been stagnating over the last decade. In fact, average wage growth in Australia has been less than 1% each year since 2007—a number that's also been below inflation and other costs of living.
Low wage growth is a big driver of rising property prices because it makes it harder for people to buy houses. When house prices go up, so do rents. And when rents go up, tenants have even less money left over after paying their landlord each month—and thus they need even bigger salaries to be able to afford a house someday.
Australia's housing market Bubble - Is it over?
The Australian property market is in a bubble. The Australian property market has been the most overvalued in the world for years, with home prices having risen above that of the US and Canada. This is not sustainable and eventually, Australia's housing market will crash. Aussie house prices are predicted to fall by 10% over 2018-19, which means that if you're thinking of buying now might be the time to do so before they come down even more!
Best countries to invest for property.
If you have been wondering which countries will be the best to invest in property, then this article is for you. We have analyzed the data and found that capital cities in South Africa, Brazil, Mexico, India and Turkey seem to be better investments than Australia due to their lower prices per square meter and higher population density.
The reason why these countries are considered good investments is that there are plenty of people who need housing in these areas, and hence properties can be rented out at a higher price than what they cost to buy. Therefore it makes sense for investors to purchase properties here as they provide excellent returns on investment over time.
Dollar has surged by over 7%
Over the last two years, the dollar has surged by over 7%. This means that if you're an Australian buying property in Australia or a foreigner buying property in Australia, your money goes further.
One of the key factors driving up the Aussie dollar is the strength of the US economy and its recovery from the Global Financial Crisis (GFC). The US market is currently booming with strong employment figures and low interest rates which have helped to attract investment back into America's shores. On top of this, Donald Trump's tax cuts have put more money back in American pockets making them more likely to spend it on luxuries such as overseas travel.
Australia Property Market is going through a tough time
The Australian property market is going through a tough time. While prices have been on the rise for years, it seems that the boom has ended, and now we are in the bust. The housing market bubble - is it over?
The Australian dollar surged by over 7% when Donald Trump was elected US president in 2016. This increased demand for Australian goods and services, which has been good for our economy but, unfortunately, has also resulted in rising property prices as well as rents across Australia's capital cities (except Hobart).
However, some analysts predict that this trend will reverse with falling house prices and rents in capital cities like Sydney and Melbourne as well as falling unit prices nationally due to its high supply levels relative to population growth; particularly within Melbourne, where they have experienced record low vacancy rates at 2%.
Conclusion
We hope you enjoyed this brief overview of the Australian property market. If you are looking to invest in an overseas market, we recommend you look at our Property Value Index, which ranks the top 20 countries based on their current level of property value growth and potential for future price increases.
