After almost two years of prolonged housing downturn, it appears that the Australia property market depression is finally lifting.
For those of you who have been watching the property market closely, it’s hard to miss the new-found enthusiasm.
The last few months have seen a surge in buyer enquiries, a significant rise in the auction clearance rate and property prices in general.
However, is the property market really turning around?
In line with historical trends, housing market downturns are rarely known to last longer than two years, and that’s what has happened in this case.
And for now, we’d say yes! The property market turnaround is for real. And this welcome change can be attributed to three main factors:
1. Bank lending practices
The recent relaxation of bank lending practices is perhaps the most significant driving force behind the real estate turnaround.
In the 12 months prior to the Royal Commission enquiry into Banking, Financial Services & Superannuation industry practices, the banks had already started tightening the ropes for loan approvals, being stringent with interest-only loans, impacting the real estate industry negatively.
Although banks are still quite stringent, they are certainly more relaxed with lending than they were 24 months ago. This has certainly led to a positive change in market sentiment, leading to a new era of property price growth.
2. Returned coalition government
The return of the coalition government has definitely boosted market confidence.
The fact that the Federal Labour Opposition Party had started a dialogue on bringing about changes to negative gearing and capital gains tax regulations, affected the property market adversely.
The perceived likelihood of change of government and potential implementation of these policies affected the confidence in the market, discouraging potential buyers and sellers from indulging in real estate.
However, the return of the coalition government that does not support changes to negative gearing and capital gains tax, rather seeking to deliver considerable tax cuts across all sectors of the Australian population, has definitely helped.
3. Certainty in the market
Uncertainty bred indecision due to perceived changes in the government and financial space over the last two years. People are much more optimistic about the growth in property prices than they were in the last two years.
Clearly, with more stability in the market the property market turnaround has arrived. Don’t get caught out in the cold!
Is the property upsurge here to stay?
Most likely, however, for now the one ingredient missing from the property resurgence is ‘stock’.
The recent auction results will definitely give the sellers confidence to put assets out there, expecting a fair price for their property.
The fact that buyers are back participating in the auctions, creating a level of competition in the marketplace, is already boosting the confidence, which will definitely help more property hit the block.
Considering all of the above, the future for property looks bright. Of course, there could be unforeseen factors that may jeopardise the growth of the market. But for now it seems to be going strong.
Is it a good time to buy, hold or sell property?
To those who have been thinking of selling but putting off their decision…now is a good time! There are buyers in increasing numbers and there is a shortage of stock. Sell and buy in the same market and you rarely go wrong.
To those who are thinking of buying, your timing is perfect. Buying at the bottom of the market always leads to highly favourable investment outcomes, providing you are buying the right property at the right price.
Whether you are a buyer or a seller, if you are not confident with any aspect of achieving an optimum result, we recommend you seek out professional, independent advice.
This is an exciting window in the property cycle. If you play it right, it has the potential to deliver substantial, long term rewards.
Disclaimer: The content of this article was written by Shane Heffernan, Managing Director of BidPro. The information contained in it is general and is not intended to serve as advice. DPM Financial Services Group recommends you obtain advice concerning specific matters before making a decision.