Is it a good time to buy property? This is the question that investors are hoping they’ll have a solid answer to by the end of spring.
Spring is typically a popular season to buy and sell property. But experts are saying that the trends this Spring will be sending mixed messages to those looking to buy.
According to recent CoreLogic data, house prices have seen their first significant rise following a two–year period of continuous fall.
While property markets vary significantly between our national cities, a rise in sales in Sydney and Melbourne lifted the national house price average in August.
But will this trend continue?
October and November are peak months for property sales, so experts are looking to these coming months to help clarify this question.
Here’s what the experts have been saying:
News.com.au journalist, Jason Murphy, suggested that buyers should proceed with caution. He believes it is too early to tell if the price spike is an anomaly or a trend.
Furthermore, he wonders if the economy is strong enough to support already over–indebted households.
“Australia’s economy is in a precarious position. Yes, you can point to things that are going well — exports are strong, the federal budget has spare spending capacity, and employment growth has been high,” he said.
“But unemployment isn’t improving, wages growth remains grim and our GDP growth rate is the lowest it’s been in a decade. Per capita GDP growth is negative.”
Murphy also thinks that now is not the time to be too alarmed however. Ongoing loose lending conditions may prove a saving grace for prospective buyers at this time.
Martin Farrer at The Guardian mirrored this sentiment, but wondered if the state of the construction industry would provide a significant hurdle to sustained market growth.
“Sceptics warn the mini–bounce is just a blip. Although they might agree there has been positive growth in many areas of the country, they say values are being inflated again only by easy credit, that the real economy is too weak and prices could still fall by at least another 10%,” he stated.
“They point to [late August’s] desperately bad figures from the construction industry, which showed the total value of building work on homes in the June quarter dropped by a seasonally adjusted 5.1% – or $699m – on the previous three months. Data about private capital expenditure was almost as bad.”
Meanwhile, real estate website Domain suggests things are looking up with marketers, with home stylists and renovators receiving a large amount of interest from prospective sellers.
Although listings are set to increase, it is still thought there will be fewer listings than previous years however.
“It’s noteworthy that new listings are still very low. We are unlikely to see a significant pick–up in listings until the end of winter and beginning of spring,” Domain analyst Eliza Owen said, adding that the ongoing trend was not yet seen.
CoreLogic’s Head of Research, Tim Lawless, told the ABC that the balance hangs in the hands of the Reserve Bank and its response to these changes.
Lawless said Melbourne and Sydney would become vulnerable should they decide to crack down on lending after this promising rise.
“Affordability constraints will probably continue to worsen from here if we do see housing prices continuing to rise, particularly against a backdrop of very soft wages growth,” he said.
He was also sceptical that demand would be able to meet the increase in seller listings.
Business Insider also suggested that while house price rises were one aspect of a solid economy, asset prices aren’t going to help the average Australian consumer who is still facing huge debts and slow wage growth.
So what’s the ultimate message from this to take away from this seasons predictions? You’ll have to stay tuned! The RBA and policy makers will certainly be keeping a close eye on the market this spring.
Words by Rebecca Mitchell
A mortgage broker will be able to find you the best mortgage deals and ensure you’re well-placed to get approved for a loan. Contact one of eChoice’s experienced mortgage brokers today and be one step closer to buying your dream home.