Why You Shouldn’t Bet on A Housing Price Collapse

Looks like in every discussion about property investing in Australia there’s always a concern about the possibility for the existence of property bubble and what will happen if the housing price collapse. After several years the housing prices keep going up, a lot of people actually believe that these prices are at their peak, and the only way to go after something is at its peak is down. Many experts and observers also believe this to be true, but just how is this condition? There is actually no real evidence yet to this condition, but with so many symptoms that have appeared and expert analysis that are agreeing to such view, it’s quite alarming.



So is that mean there is a potentially huge risk to invest in a property currently when prices are might be at their peak? First of all, lets take a look at some of the most influential analysis in the market. If we observe these analysis deeply, actually there is a similarity amongst them. Usually these analysis are made based on the observation in major cities like Sydney and Melbourne, where housing prices have been moving up so fast the last few years and starting to slow down. It’s also predicted that the prices will slow down significantly by 2018.

Sydney is predicted to be experiencing only 2% rise while Melbourne is at 4% by the mid 2018 according to a report published by BIS Shrapnel. So actually no one is predicting any price collapse yet, but they do believe that the prices are definitely slowing down in some major cities. In fact, many reports even showed that the prices in some other areas are continuing to rise especially in areas with good economic and infrastructure growth.

The reason to this condition is the demand in the market that remains high, while many areas are currently in an undersupply condition, causing the housing prices keeps moving up. Currently the banks are still providing relatively easy loans for home buyers, which keeps the demand high. The growing economy in many areas and immigration flow to the country are also keeping the demand for housing units remain high. So should you bet on a housing price collapse? You better not, at least not in the following three years, or you might just miss some good investment opportunities that might provide great returns for you.

Is Australia in a Housing Bubble?

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Brisbane Property Market

The Brisbane property market has gained huge popularity lately due to the steady economic development and population growth that’s finally resulting in high demand of housing units. More and more investors are attracted to this market that has been proven to be quite lucrative. Many people believe that the friendly weather in this part of the country is one of the main attractions for a lot of people to move to this city and also for property investors to invest their money in its property market.

Location is really a strong point for Brisbane, due to this particular benefit, the economy is really thriving in this city. This is the kind of growth that could be very beneficial for property investors, whether on short or long term basis. The infrastructure sector is growing fast as many local and international companies are expanding their operation in this growing city. This provides even more opportunities for property investment in Brisbane, because more companies operating in the city means more employment and population growth, and because these companies also will trigger faster economic growth, the people who live in Brisbane will be able to afford buying new properties.

The good news is the value of property in Brisbane keeps on increasing, while the ratio between demand and supply looks like always in favor of the property investors. Another great advantage is that the risks are actually quite low, because property is not as complicated as stocks and shares. But you do need to be careful, because when you invest in property that means there will be a lot of money involve.

When you want to invest in Brisbane property market, you really need to know about property management so you can be absolutely sure that your investment will provide benefits for you. Poor management is a recipe for disaster especially if you have spent a lot of money on multiple properties. If can’t handle it yourself, then it’s a lot better if you hire a good property manager to deal with your investment, because property management could be quite challenging and it’s not something that you can learn through trials and errors, once you make a mistake you will experience a huge loss. Nowadays you can find so many property managers in Brisbane, but you need to be completely sure the one you hire has lots of experience and able to do a great job in protecting your investment.

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Is Australian in a housing bubble?

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Australian House Prices

In the last few years there has been quite a buzz in the media about the rising of Australian house prices. All this time most people think that the movement of house prices in Australia, whether up or down is influenced by the factor of supply, and most of them think that the rising of Australian house prices in the last few years are simply due to the short of supply. In some particular cases, this might be true, but this is not entirely true and definitely cannot be used to describe the Australian house market as a whole.

The availability of finance seems like a more reasonable factor in this matter, or in other words it’s a matter of how much banks in Australia are willing to lend. Within the last decade we have seen the credit explosion in the financial sector in Australia, which has coincided with the huge increase in house prices. When a lot of banks are willing to lend more money, more people are willing to borrow in order to buy homes, even those who actually haven’t thought of buying homes are now have the capacity to be in the market due to the lending.

The truth of this theory can be proven by looking at the condition during the global financial crisis. At that time, most banks tightened their lending policy and they didn’t want to take even the smallest risk when it comes to giving loans of any kind, the result was Australian house prices quickly dropped. Learning from that condition, we know just how much the banks can influence property prices. When they stop giving loans or tightened their lending criteria, the demand will drop, which also decrease s property prices, on the other hand when they lend more, the demand will rise and that will increase the property prices as well.

Regarding the “undersupply” theory, it’s totally debatable. Even though Population growth in Australia is considered to be one of the highest in the world especially through immigration. But this immigration flow also brings up a new culture where people share accommodation with friends and family to lower costs, so actually currently there is a co-habitation culture and that makes low property supply doesn’t really matter. Besides, nowadays there is an increase of rental vacancy rates in many capital cities in Australia, and that is a very unlikely trend if the Australian property market really suffers from an undersupply.

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Is Australian in a housing bubble?

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