Australians are optimistic about the state of the property market and will continue to invest in it, new research has revealed.
According to new data from Mortgage Choice, 64.3 per cent of Australians believe the housing market will continue to perform the same as it has in recent years, if not better.
Mortgage Choice chief executive officer John Flavell said it’s obvious that most Australians remain upbeat about investing in property and will continue to buy and sell dwellings.
“Over the past few weeks, we have heard endless commentary about an ‘inevitable slowdown’ in the property market.
“According to data from CoreLogic, property price growth has started to stagnate in recent months. Over the three months to November, property prices grew just 0.4 per cent across the combined capital cities.
“As a result, many market commentators have started to panic and are suggesting that this is the beginning of the end. Some commentators have even gone so far as to suggest we could soon see a property price crash across some of the bigger markets, notably Sydney and Melbourne.
“The reality is, property prices are merely stabilising after a few years of runaway growth”, Flavell said.
“This stabilisation is something we have long expected.”
Significant changes have been made to investment lending policy in recent months. Moreover, interest rates have been sitting at historical lows for well over 12 months and will continue to sit at historically low levels for some time yet. Both these factors have combined to take some of the heat out of the market.
Yet while the heat has started to come out of the market, Flavell believes there are no signs to suggest a property crash was on the radar in Australia.
“For a crash to occur in the housing market, there would need to be a number of economic factors at play,” he said.
“Firstly, supply would need to be significantly high enough that it exceeded demand. Secondly, the cost of borrowing money would need to rise rapidly in a very short period of time, and unemployment would also need to reach dramatically high levels.
“Moreover, there would need to be a lot of people looking to liquidate their properties at the same time.
“If all those factors were to occur, a crash could be a possibility, but based on how our economy is travelling at the moment, it is fair to say that we are not in for a crash.
Flavell noted that Australian Bureau of Statistics figures show Australia’s population grew 1.6 per cent over the year to March 2017 – which is significantly higher than other developed nations.
“In total numbers, our population grew by 389,100 over the past year, and all of those people need somewhere to live. If we want to cater to our growing population, we need to build more properties, and that is exactly what we are doing.
“So, supply and demand are working in good kilter with one another. At the same time, interest rates are low and we expect them to stay lower for longer. Meanwhile, the unemployment rate is trending downwards, with the latest data from the ABS showing that the unemployment rate fell 0.1 per cent throughout September to 5.5 per cent.
“When you consider all of the above economic data, there is nothing to suggest that a property price crash is in our near future.
“In fact, the opposite is true.”
Flavell concluded that with interest rates sitting at all-time lows, lenders competing for business and property price growth stagnating across some markets, now was a good time for prospective buyers to achieve their property goals.
“If you have plans to be in the property market, now is the right time achieve your goals.”