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Will Our Housing Market Cope?

Living in a capital city means witnessing a constant presence of cranes on the skyline, raising questions about the demand to fill the ever-expanding developments. Surprisingly, these properties are being occupied at an impressive rate, despite reports of a housing shortage and struggling builders. High rental costs have pushed more people to accelerate their purchasing decisions, driven by the inability to secure suitable rental accommodation. Additionally, projections indicate that Australia’s housing capacity will be exceeded due to a significant increase in the migrant population. As a result, more permanent or long-term migrants are considering bypassing the rental phase and fast-tracking their journey to homeownership. Meanwhile, home sellers are patiently waiting for the next wave of opportunity, and astute investors are preparing to capitalize on favorable market conditions.

Positive Shift in the Housing Market

While we cannot predict the future of the property market with certainty, several indicators suggest that property prices across the country have reached their lowest point. In April, CoreLogic’s Home Value index reported consecutive monthly increases after nearly a year of decline. Tim Lawless, CoreLogic’s Research Director, states that these figures imply that Australia’s housing market downturn has likely passed. Furthermore, auction clearance rates remain slightly above the long-run average, sentiment has improved, and home sales are aligning with the previous five-year average.

Implications of a Growing Market

The aforementioned developments indicate that the housing market is on the verge of experiencing unprecedented growth. It is not uncommon to hear people say, “I wish I had bought that property back then” or “I regret selling when I did.” While not everyone can seize this opportunity immediately, it is crucial to approach any investment with thorough due diligence and careful consideration.

Key Considerations for Property Investment

Planning: Evaluate your financial situation and determine a comfortable investment amount that won’t compromise your financial stability. Establish clear property goals and set a realistic timeline to maximize potential capital appreciation.

Diversification: Consider diversifying your property portfolio across different types of properties (e.g., units, villas, townhouses, houses, or commercial properties) or in different states to spread your risk. This strategy safeguards your portfolio in case a specific property type underperforms.

Research and Due Diligence: Invest sufficient time to understand the market and the factors driving anticipated growth. Analyze potential risks and economic influences that might impact property appreciation.

Seek Professional Advice: If you lack expertise or feel uncertain about property purchasing decisions, consult with a property advocate or other industry professionals who can offer guidance tailored to your specific circumstances.

Emotion Management: Avoid letting the fear of missing out (FOMO) or short-term market fluctuations dictate your property decisions. Maintain a long-term perspective and make rational choices based on thorough analysis.

Investing in the property market always carries some level of risk, as market conditions can be unpredictable. However, the current landscape presents an opportune moment to consider strategic investments. Conduct thorough research, carefully evaluate risks and potential rewards, and seek professional advice when needed. Remember to base your decisions on informed analysis and align them with your risk tolerance. We are here to assist you with your finance options, so feel free to reach out and discuss your property purchasing plans today!