Australian Housing Prices: Is There A Bubble?
There are different opinions on whether Australian property prices are too high
. However, I'm certainly not selling my property. Would you?Compared to the rest of the world, Australia sailed through the Global Financial Crisis in good shape. Not only did we fare better than almost every other country, we also saw our property markets actually increase in value by up to 16 per cent through this tough period.
Why was that, and what is the risk now that the dust has settled? Are our property prices too high? Are we facing the risk of a big adjustment like in the USA and some European countries?
In our view, no. The increase in our property prices through the GFC was linked to the fact that our interest rates dropped very quickly to historically low levels (a bank rate of four per cent). At the same time there were special measures to support this sector, such as the First Home Buyer's Grant. When taken with all the factors already in place in support of property (what economists call 'the fundamentals'), our market showed a mini boom that has only flattened off in recent months.
In our view Australian property remains a stable and predictable investment option. There is an existing under-supply of almost 200,000 homes, which means that demand is greater than supply. We also have a very restricted supply of new homes, due to the slow release of new land, with developers and homebuyers alike being short of the credit needed from banks to meet demand.
Other key issues include:
1) The economic boom in the minerals sector means that there is strong demand for jobs, and unemployment will remain between five and six per cent
2) Australian home loans are high quality in comparison to the poor 'sub prime' loans that triggered the falls in the USA
3) In Australia we have 'full recourse' loans, which means that most of us will do almost anything to ensure we keep our homes and we'll make whatever sacrifices are needed to do so
4) One in seven properties is owned as an investment, which means that there is income from the tenant and the government to support the monthly mortgage. This makes these properties far more affordable to hold when compared to privately owned homes.
Most experts believe that we will see a slowing in the rate of growth of house prices rather than a sharp fall. This is to be expected, as 15 per cent a year increases could never be sustained.
There will always be periods of relatively faster and slower growth, and property is a long-term decision and investment. In our view, it makes sense to be in the market rather than waiting on the fringe to see what happens. Time passes very fast, and it is easy to sit on the fence and miss out when strong growth resumes, and when the market heats up.
The upside is that markets for the next six months are likely to be quieter and more stable, and not driven by some of the reckless behaviour that can drive up prices.
by: Peter Thorpe The Amazing Tourist Spot Guidebook To Having The Perfect Voyage At Tijuana Luxury Antigua Holidays- Mean Exploring This Caribbean Tropical Paradise Christmas Gift Baskets: Ideal Presents on Christmas The Best Visitors Travel Options On Having A Action-packed Voyage In Mexico City Planning A London Trip To Last A Lifetime Of Memories Travel, Save and Discover: Advice for Savvy Travellers Let Snowbird Travel Insurance Cover Your Needs A Stitch In Time Prior Foreign Trip Is Available A Newbie's Extensive Suggestions Pro Guests Wishing To Experience On A Caribbean Trip U Turn Vending Franchise Opportunity The Newbie's Absolute Recommendations Pro Tourists Preparing To Travel For The Caribbean Journey Oasis Punta Cana Top Rated Honeymoon Leads Villas Schemes Dining Plus Landmarks The Professional's Extensive Directives Pro Traveler Preparing To Leave For A Caribbean Voyage