Buying a house in their dream city is an important milestone and a lifetime decision for mostAussies and people residing in Australia. It requiresyears of savings, diligent planning, property market research and various other factors reach a decision of purchasing a house. It can be considered as an asset, financial security, a source of rental income and a place to live andsee their children growing carefree for most families, without paying huge rentals and accommodating routine property manager’s inspections. In addition, a home purchase also helps in tax savings.
Although there is much talk about correction of real estate market in Australia and many experts still projecting a price correction, a cursory look at average property prices in various markets of Australia reveals that overall there isn’t too much variation in sale prices as compared to the previous years.Also, property prices differ in each city and vary hugely as per the location and its inherent growth drivers.
However, a deep-dive assessment of the market conditions reveals that a pseudo-price correction has come in the form of freebies, discounts, offers or schemes. Although developers and builders are not in favour of visibly reducing the prices as it transmits negative sentiments in the market, there are some discounts being offered to serious buyers who are ready with their purchase decisions.
The problem in Australian housing marketis comparatively lower demand as most of overseas investments are drying up and huge unsold / under development / planned inventory in almost all states. Some of the high growth areas like Melbourne CBD and outer markets, suburban regions of Brisbane including Gold Coast and Ipswich, and north-western and south-western suburbs of Sydney are presently dealing with this issue of more supply compared to actual demand over short span of time. Most of the developers and builders are battling with huge unsold inventory and are keen to offload the same at the earliest, creating pressure on real estate pricing.
All-in-all, this could be the ideal time to purchase a house for end-uses and for investors looking to invest in the property market. The market is a totally purchaser-friendly at the moment and builders are taking out time to discuss in details with purchasers for their home buying requirements. If one has good financial planning and feels that the future is safe, it is the right time to purchase a house and seal the deal.In addition, with pressure on inflation rates, house financing is likely to harden in the future. Therefore, for end-users and investors, it is the right time to avail the home loan at best possible rates.
A home purchase is a long-term investment, and for properties at good locations and with the right configuration and amenities, there will always be good demand and should appreciate over the long termin all likelihood. However, it is important to understand that the fundamentals of location, connectivity and amenities of the project are essential for price growth to happen. The projects which are closer to or well connected with business centres, retail areas and job markets (present and future) have more potential for price appreciation and sound rental returns in the long run.
Also, property market is bound to have price fluctuations. In an established market, investors and buyers generally keep a minimum horizon of 2-4 years before putting the property on the market again.At the end of a sufficiently long period, prices for the right type of properties should appreciate, and in the meanwhile, if the home is not for personal use, it can earn rental income as well.
The best way for all homebuyers to address a property purchase is to think like an end-user and focus on buying a home that meets one’s own needs. This way, they should be able to appreciate the right project amenities and automatically pick properties which have the right attributes such as connectivity to workplace hubs, availability of public transport, hospitals, schools and shopping, and is resultantly investing in a property which can certainly appreciate in future.
Price corrections tend to happen in projects and locations which are bereft of the right fundamentals. Areas which have not taken off because of lack of the requisite infrastructure, and located away from job markets, public transport, schools, hospitals and retail areas, are bound to see price corrections as demand will flow to areas and projects which have the right attributes.
Although prices in locations and projects that tick all the right boxes may remain stagnant for a while, but their inherent advantages will safeguard against any serious short-to-mid-term corrections. Also, these areas would be the first ones to witness price appreciation as and when there is any price increase in property market. Therefore, it is a perfect opportunity for investors and self-users to pick up the right property at right prices. For the intelligently chosen properties, the inevitable law of demand vs supply should gradually bring in capital value appreciation.
Finally, one should remember that every asset class witnesses fluctuations, but homes are also ‘performing assets’ which one can live in or rent out till the time you don’t put it in the market again for the capital price gain.