Australia’s economy is unarguably one of the strongest in the world and we are seeing a large percentage of people putting their money back into property as the effects of the Global Financial Crisis are quickly becoming a distant memory.
We are finding that current buyers want to secure good quality property while there still remains a small discount to 2009 prices within many price ranges, and before expected price increases in 2010.
Interest rates, while having had recent increases with several more to come, are still historically low. When you look at rates over the past 40 years you’ll find that seven to nine per cent has been the range people have become accustomed to, so the current 5.5 per cent is still attractive to buyers and investors alike.
There has been a severe shortage of property listings available for sale in the last 12 months and an overwhelming increase in buyers which is creating a wealth of competition in the market place and is resulting in prices being pushed back up. I suspect that as market confidence continues to grow, we’ll see a spike in listings in the New Year.
Market Observations heading into 2010:
- Market confidence is extremely high across almost all price brackets
- Stabilising economy and finance sector will create a price surge in 2010
- Spike in second and third home buyers over recent weeks, market no longer dominated by first home buyers in the bottom end, investors are back
- Record population growth in NSW will keep residential property prices growing well into the future
- First Home Owner Boost expires on 31 December. Interest rates are still low and the original $7,000 First Home Owner Grant remains in place along with stamp duty exemptions for properties under $500,000. No doubt that activity from first homebuyers will pull back somewhat by early 2010 but I think investors will pick up the slack
- The cash rate peaked at 7.25 per cent in March 2008 and is now currently at 3.75%. Hence, interest rates are still more than 50 per cent off their peak. The time to lock in attractive fixed rates has passed with the banks raising their fixed rates several times in recent months, independent of the RBA
- I expect rents to also increase next year by between five and 10 per cent due to the ongoing supply issues and this will keep yields strong