Housing Market to Stabilize Later this Year

Recently, property investors have been going through some challenges pertaining to the housing market downturn. It’s been considered one of the worst, if not, the worst in modern history specifically in terms of the price fall and the duration of the situation. Australian property values fell to over $133.1B in December, while across the country, capital houses fell to an average property price of 2.4 percent. This all, especially to investors sound disconcerting because market downturns normally happen when interest rates are high. However, this time, interest rates are at record lows so this condition is different.

But looks like this wouldn’t be the case before the year ends.

Experts say that housing price falls will end and the market will stabilize before the end of 2019. There is some seen evidence of housing market stabilization such as an increase in auction clearance rates particularly in Sydney and Melbourne—the two states that have the most influence on the market. Unfortunately, the loan approval rating is still low especially for those who are buying their property or home for the first time. Experts add that people are seeing that right now is a good time to buy rather than later. This helped tremendously in terms of the pace decline in property prices.

Why is a falling demand bad news?

By nature, the real estate industry is credit-driven. Meaning, if you purchase property, normally, it would be paid in cash. Rather, it’s going to go through credit. Some people buy in cash but generally speaking, it’s not that often. If the demand is low so, do the prices. This could affect lending because of the losses that will be experienced. This problem has not only been affecting Australia, but also countries such as China, New Zealand, and all of Europe as well.

Where is the price falls in Australia seen?

Much of the price falls in the nation are seen in the capital states Sydney and Melbourne. The slowing down of the price falls started in December, but in April, the median values dropped from 0.7 percent to 06 percent which was considered slower than what it had experienced earlier in the year.

Experts say that property prices are stronger during the Autumn and Spring times. However, come Winter and Summer, we can see some weakness. According to Australian economics team, the trends are consistent with “other Australian marketing indicators”.

Yes, although it is true that Australia’s market downturn is deemed really bad news for a lot of investors, it’s still important to continue thinking positively. This recent improvement is not only promising but is something that investors and buyers could learn a lot from. The pieces of evidence accumulated in terms of a more stabilized market may still change, but it’s great to think that the nation is slowly recovering from some tough times.

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