Ok, let’s talk property in Australia and where I see it going over the next couple of years.
Firstly, I’m not a magician, I’m not psychic and I’m not mindreader. These are simply my thoughts based on what’s been happening around the country and how I personally see it evolving. Take it or leave it, totally up to you.
So, around major markets in the country, there’s clear housing growth and due to low interest rates and first homeowner concessions this is where people have been putting their money – nothing else is giving them any decent returns.
So how are Investors tracking? I believe, that in order to slow the growth, interest rates will not necessarily increase (an increase will not help the economy), but the amount will definitely be capped, and restrictions on multiple lending will be put in place, particularly for investors that are coming into the market. For investors trying to get back into the market, servicing may be reduced or penalties may be applied. They’ll cap investors on the amount that they can borrow or larger deposits will be required before signing on the dotted line.
Now in terms of First Home Buyers, I don’t think there will be too many changes. Australia WANTS first home owners to get into the market so will continue to make it easier for them.
In respect to the markets, I see affordability being a major issue in a lot of areas. In Sydney and Melbourne, the two major markets in Australia, housing remains very unaffordable. So what does that mean for Sydney and Melbourne? Well, put simply, people will be buying something that they can afford! Now what does that look like? Well, it’s a townhouse or a unit in the same location. If you want to be in a particular suburb or area for quality schools, a better lifestyle or convenience of location, you’re going to buy a three bedroom townhouse or a two-bedroom unit instead of a free-standing house. This is a big change in thinking and I see a lot of interest in that type of market which hasn’t really been there for the last four or five years. In some cases, there’s been an oversupply in this area, so I see this gaining some real momentum depending on the type of product it is.
OK, so what’s going to happen when the overseas gates re-open? Well, we can’t put a timing on this as yet, but when they do, there will be an influx of buyers. Generally speaking, this will also help the unit/townhouse market thrive, in particular if students are coming over to attend our Australian Universities – keep an eye on on the University situations but also the the floodgates of overseas investors or migration into Australia.
So where is the property market sweet spot? The sub-million dollar markets. Anything over a million dollars, if someone wants to get into that market, conservatively they need minimum of $150,000 to $200,000 to get in there. That’s a lot of money to save. That sub-million dollar market is where I would be identifying and looking to put my money because the $500,000 to $600,000 property markets are now extremely affordable. The yields are pretty good and a lot of suburbs surrounding them may be million dollar suburbs already.
So that’s where I see us heading over the next 12 to 24 months!
These are just my predictions, rightly or wrongly but it’s a really interesting time in property, and it’s very unusual that we see all housing markets, well most housing markets, moving in a positive direction. Usually these markets are all working on their own, it’s unprecedented, yes, that word’s been used a lot, but the direction has definitely surprised a lot of people post COVID.