How will Australian real estate market change at the end of 2018?

australiaAustralia tops the list of the happiest countries around the world. Yes, the country has done an excellent job at creating a satisfied community. But this feat comes with a price. Happy and satisfied doesn’t mean the people live for free. Just like the rest of us, they pay for food on table and roof on their head.

2018 has been a great year, especially for the Australian Real Estate Market. But, it seems the last quarter of this year won’t be so good for the real estate market as it will lose its value. Don’t worry; we will explain this changing trend and what led to it.

Interest Rates Will Rise

The Government made an announcement and said, “They don’t see a strong case for near-term adjustment in monetary policy. But real estate consultants say the interest rate will probably go up in last quarter of 2018.

According to RBA, the interest rate will be raised once it’s clear that this rise helps the economy grow by fighting unemployment and moving inflation back to 2%-3%. No one needs to worry because the interest rate won’t rise for a few months.

This is only a fraction of the big picture because once the Australian banks lend funds to mortgages, it will make up local deposits, and the money borrowed offshore. If the interest rates rise overseas, it will force the banks to rise their mortgage rates a little bit.

The good news is, once the banks raise rates, RBA will take notice and will delay raising the cash rate.

Apartments Will Become Affordable

Apartment prices in east coast will fall thanks to the oversupply of housing units. With the strong unit pipeline, unit completion remains high over next few years, and the excess supply will keep investors from investing in real estate due to a decrease in demand.

It will also lower per unit price by 2020. According to a survey, the property value in Sydney can drop 3.8%, 5% in Melbourne, and 7% in Brisbane. However, apartments will become more valuable with a rise of 8.1% in the following cities:

  • Canberra
  • Adelaide
  • Hobart

But before that happens, there will be a cool down in apartment market thanks to an oversupply of housing units and restrictions applied by Banks.

The Housing Market Will Cool Down

After years of growth, Australia’s property market will cool down. The overage house value will fall 0.5% starting from January. The housing market holds up better than apartments as they are different markets. Local and overseas investors favor apartments while most homebuyers invest in detached houses.

According to the Experts, even if the apartment prices fall in Sydney, Melbourne or Brisbane, it won’t even the value of the dwelling. With the fact that unemployment is low or falls, there is no way the interest rate will dramatically increase.

It may offer the cheapest home loan interest rates australia in years. The market has passed its peak, and the prices will start falling from 2% to 6%.

augusta free press

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