Property has always been a relatively stable market in terms of profitability – owning a piece of land, commercial or private, has always been a great investment, to say the least. However, regardless of how volatile or stable, no piece of investment should be taken lightly.
When it comes to the Australian market, it is safe to say that 2017 was somewhat treacherous due to the new policies that were instated to protect the property prices and debt levels. In order to keep up with potential fluctuations in the Australian property market in 2018, we’ve rounded up a list of 5 trends that are likely to present themselves in the near future.
1. The cooling of the property prices
The two main trends of 2017 that were accurately predicted by many commentators were the cooling of property prices in Sydney (after a couple of years of huge percentage gains), and the severe slowing of Melbourne’s growth towards the end of 2017. These trends are likely to continue, at least for the better part of 2018.
The logic behind this revolves heavily around the banking regulators, who actually want to see a slowdown in the growth of private property prices.
Additionally, the fact that auction results are still growing weaker is a pretty sure-fire sign of the above-predicted slowing. The official RBA interest rate is likely to stagnate, while the price growth is set to continue growing.
2. The unchanged interest rate
As mentioned, the RBA interest rate is looking to remain at a stable 1.5% throughout the current year. This is mostly due to the fact that Australia’s economic growth is simply not strong enough to justify an increase in interest rate – as of yet, the country’s economy is still well below its real potential.
And while the unemployment rate is falling and more and more jobs are being created, leading to spikes in full-time employment, this is being offset by the wage growth, which is nowhere near as quick as it is supposed to be. Add sluggish retail sales and a marginally inflationary environment to the equation, and the unlikeliness of the interest rate decrease becomes obvious. On the other hand, the interest rate isn’t likely to grow either, seeing as how the RBA is pleased with the property market cooldown.
3. The investors will take a step back
Some say that it’s exactly the previous record years of investment in residential property that has caused the conditions to start getting tougher, others claim that this is absolutely unrelated, but one thing is for sure – the circumstances have definitely gotten tougher, and they are looking to get even worse.
A once a relatively seamless thing, getting a loan has turned into one of the biggest challenges of investment – the lending restrictions are still on the increase.
Investors will probably have to find other ways to grow their money, and they will most likely turn to the rental housing market.
4. First-home buyers will see more opportunities
Seeing as how the investors are more than likely to take a step back, first home buyers are likely to see a ton of opportunities in 2018’s Australia; competitive interest rates are going to make sure of this.
The only problem here actually comes from quite an unlikely source – the deposit. It will continue to rise as an increasing number of people are going to need some form of assistance in order to afford buying a home. Fortunately, companies such as White Square Properties are extremely dedicated towards customer satisfaction, and will likely help a first-time home buyer in getting a suitable deal.
5. Quality will increase
A detrimental thing that has been giving Australia a bad name in terms of property for some time now is the greatly dreaded FOMO, also known as the “fear of missing out”. Up until recently, many inexperienced home buyers and investors used to go for any property that would fit their budget, leaving it all up to sheer luck.
As the market continues changing in 2018, a fight for quality is to be expected, which will leave buyers and investors more and more satisfied.
As property prices continue cooling down, the interest rate is likely to remain at a stable 1.5%. With investors stepping back and trying to take on a similar, yet different road, first-home buyers will probably see more opportunities. Considering the rising quality, 2018 is going to be a strange year for the Australian property market.