Understanding the housing market can often be complicated and overwhelming for many when looking at properties. Although an extensive number of factors can result in nuanced effects, four key aspects drive the price of property.
Interest rates are among the largest factors driving the price of properties globally. In essence, they dictate the amount an individual will need to pay in excess of a loan. It is important to recognize the significant impact even a slight change in rates can have. When interest rates are low, the encourage individuals to invest – particularly in property due to the long-term nature of mortgages – increasing the strength of the market.
Currently, the Reserve Bank of Australia has placed rates at 1.5% for 17 consecutive months, constituting both the lowest rate ever, and the longest length of time elapsed without a change. CoreLogic, a property data, information and analytics service, isn’t predicting a rising until ‘at least the first half of 2019.
It appears obvious given the intrinsic link between the two, but the state of the economy can heavily influence success within the housing sector. Simply, when borrowing money is difficult, often due to low circulation, the lack of circulation dries up the sale of houses. Paradoxically, free lending can drive house prices up.
Statistically, Australia is ahead of the world in economic growth, sitting at 26 years of uninterrupted economic growth. – the longest recorded for recession free growth in a developed country. This continued circulation of currency throughout the market, while increasing at a consistent rate, encourages the purchase of new property while not flooding the market and driving up prices.
Supply and Demand
A basic economic principle that states an increased demand for a product increases the price.
Recent growth within the market has seen the prolonged demand housing increase the prices of housing within most major markets. However, demand is unlikely to recede any time soon.
147,400 people flock to Victorian annually significantly increasing demand for property on top of an already existing first home buyers’ market. As such, demand for property, especially within Melbourne is only going to help the market.
Although a beachfront view, city skyline, or access to shops and schools comes into mind when most talk about location – and they are appealing – there is more to take into consideration. The most prominent criteria is jobs. Brisbane (2002), Townsville (2004), Sydney/Melbourne (2013) and Hobart recently all saw there housing markets boom because of job growth. Therefore, opportunities are also reflected through a local markets prices.
So if you are buying or selling and would like a free data report on the area, call our Jim’s Real Estate team member Peter Raja today on 131546 or email him at email@example.com