There’s no time to buy and sell property quite like spring. New figures from the Property Council of Australia and RP Data indicate the nation’s $5.4 trillion residential housing market is its biggest – and most valuable – asset class.
However, despite creating 150,000 houses annually over the last 10 years, residential dwelling stock is still short, according to the Australian Residential Development Outlook report.
With warmer weather and more daylight hours, spring is a popular time for would-be buyers to crawl out of the woodwork and descend on open inspections across the nation. Plus, the 2.5 percent cash rate continues to make taking out a home loan a viable option.
Where is the property market heading?
As Australia gets well into spring, buyers and sellers will be curious about what’s expected across the country’s various property markets.
For one thing, interest rates are expected to remain low.
“The RBA has signalled that interest rates are set to remain low for some time. As home price pressures ease off, we expect home owner affordability to remain reasonably favourable for the foreseeable future,” Shane Garrett, HIA Senior Economist said in May.
A low-interest environment was discussed in the Australian Residential Development Outlook report, too. Coupled with strong competition between lenders, buyers will continue to secure attractive borrowing deals. Of course, using a home loan calculator can help such buyers get a great deal.
Housing finance is showing a strong flow into dwelling starts, with completions expected well into next year, according to the report.
Furthermore, national building approvals have hit their highest levels in three decades (annualised) during 2014. With 193,667 dwelling approvals recorded in 2014, more buyers may find themselves getting a leg up on the real estate ladder.
What are the pitfalls?
A number of risks have been identified for Australia’s property market, which will be of interest to anyone with a focus on the spring housing market.
Despite Garrett’s comments earlier this year, “affordability constraints” are holding back first-time buyers. With plenty of buyers out in full force during spring, such buyers may find themselves under further pressure to bump up their offering prices, in order to make the cut.
“As evident in 2014, residential development is poised again to underpin state and federal budgets in mid-2015,” the report stated.
That said, it’s clear consumers looking to take out home loans and other financial products are out to protect themselves.
During 2014’s first quarter, the household savings ratio reached 9.7 percent, according to Australian Bureau of Statistics Figures. This ratio has been trending higher since the end of 2008, indicating that more Australians are focussing on future-proofing their finances. Household wealth has increased “strongly” during 2014, reaching significant levels thanks to soaring home values and share prices.
So despite potential risks for upcoming months and 2015, current conditions indicate plenty of residential property markets across the country will be active during spring.