Looks like anyone who wants to buy or sell a property in Australia always has some worries related to the growing speculation of Australian property bubble. Actually a lot of observers still believe that property prices in most Australian cities are not showing any signs of declining, however Treasury secretary John Fraser recently clearly stated that Sydney and some parts of Melbourne are currently in a housing bubble. This whole thing has really scared many people and make them wonder how they can protect their investment if they want to buy or sell properties.
Some property investors won’t even consider making an investment in Sydney and Melbourne anymore. Mostly they think that the growth rates in those two major cities are quite unsustainable and there will eventually be a correction, which is not a very good thing for property investors. For these investors, the buyers market in these cities is over leveraged. It might just increase the number of repossessions and mortgagee sales if the interest rates are rising.
However, even if all those worries really happen, any market decline will likely hit the hardest on the higher end of the market. So, if you’re not too sure about making any property investment in major cities that may have a chance of experiencing a property bubble, then it would be much safer if you just choose to invest properties that have good quality and also well priced that are at the bottom up to the middle end of the market.
For example if you’re interested in Sydney property but you’re worrying about the impact of the property bubble, then you could look into properties in the neighboring suburbs, such as the Central Coast, and Wollongong that are much cheaper. In this situation, investing in multiple areas and states might be a good strategy, because then you can spread your risk and will not lose too much in case the prices are declining in one particular area.
Another precaution you can make is to watch for the worst-case scenario when you are looking to sell your property, taking into consideration of just how much your property value could fall if the crash actually happens. Consider some important factors like how long have you had the mortgage, private spending, infrastructure of the area and demographics. Beware if you own a luxury beachside property or a high-class apartment, it’s usually got hit the hardest. The important thing is to find out just how much the value will drop for the particular property you have in case there is a crash in the market and act quickly based on your finding to save your investment.
Is Australian in a housing bubble?
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