In the near future your mortgage may cost less, homes may be cheaper to buy and there may be more properties to choose from. All of these factors should combine to make the market more accessible for all Australians, helping to ensure that dreams of home ownership can become reality.
Exciting as all this might be, you’d be forgiven for thinking it sounds to good to be true. Let’s have look at what’s happening in the market right now, to clarify why entering the Australian property market may be easier in the near future.
As you may well know the Reserve Bank cut the cash rate to 1.5 per cent, as of August 3. This is the lowest the rate has ever been and indicates that confidence in the stability of the property market is high.
Early reports are suggesting that most major banks are not passing on the the full cut on to customers, however, more cuts may be on their way. Alberto Gallo, a leading credit analyst, recently explained to the Sydney Morning Herald that the cash rate is likely to continue to drop even further, perhaps even nearing 0 per cent.
If the rate continues to decrease banks should eventually pass on more savings to customers, meaning interest rates will be lower on your home loan. Paying less interest could mean that your repayment amounts are smaller, or that you’re able to pay your loan off quicker – making borrowing money to buy a home cheaper and easier. Keep this in mind when you calculate how much you can borrow.
If you live in a major city you may be able to see an apartment building or residential development in construction. If not you’ll pass one on the way to work, or hear the sounds of construction for your office.
This is because recent years have seen a record-breaking increase in residential development around the country, particularly that of apartments, according to a CommBank report. Approvals have recently slowed, however construction has remained at a high level.
The effects of this increased supply are revealing themselves in the future of unit prices as forecasted by QBE. The data suggests that during the period of 2017 and 2018, median unit prices will decrease in all capital cities, except Brisbane, which will see an increase of 1.3 per cent.
Clearly, this will make purchasing a unit easier for the vast majority of Australians, and may give house-hunters more to choose from when searching for the perfect property.
If you’ve had your eye property prices in the last 10 years, you may doubt this claim. However, stats from the aforementioned QBE report are very clear. The forecasts show median house prices decreasing from 2017 to 2018 in Sydney, Melbourne, Darwin, Adelaide and Perth, as well as slowed rates of increase in all other cities.
Perhaps most surprisingly, median house prices in Sydney are expected to fall by as much as 5 per cent during the same period – the first time this has happened in years. For many owning real estate in Sydney has long been an unobtainable goal, but these changes could signal the end of that era and the beginning of a more affordable property market in the city.
While investors may worry that their capital gains will decrease, home buyers with limited budgets will celebrate the affordable future of property in our country. Stepping onto the bottom rung of the property ladder will be a far easier task, a change that is for the better.
If you’re looking to take advantage of these recent trends, a licensed real estate agent can help you make the right decisions and ensure your investment is a smart one.
Reference: Ray White 2017