Spring has officially sprung this week, and that traditionally leads to an increase in real estate transactions as the market thaws out. But there’s more to an upward rise in Sydney’s property market than a bit of pollen in the air, surely?
We keep a close eye on housing demand nationally, and right now there’s some interesting data on housing affordability and demand that just may surprise you — particularly as it relates to our hot Sydney suburbs.
As the mercury cruises skyward this year, all indicators are pointing to a much improved environment to get into the housing market; be it for the first time as a first home buyer, or as a means to securing your financial future as a seasoned property investor.
First, a note about housing affordability…
Contrary to popular belief, prices of accommodation in Australia have declined and are now back where they were in 2002. Due to the higher availability of affordable housing, we are seeing a healthy surge in demand and buying inquiry for housing and apartments.
While the status quo suggests that Australia is ranked very low in terms of housing affordability, these claims must be taken with a pinch of salt as many factors come into play when dealing with such a complex and meticulous issue.
The key difficulty in making such a comparison lies in sourcing comparable data that is relative to the level of price across countries. Many such claims don’t actually take into account the growth of incomes and the broader economy over time. In fact, if we compare Australian house prices to income levels with appropriately comparable countries, Australia sits comfortably around the middle of the affordability table.
Lately, fears of a crash in the so-called ‘housing market bubble’ have now been quaffed, and signs of anything of the sort are less in evidence more so than ever.
Meanwhile, housing demand is as strong as ever.
If you’re in the market for a property investment, it’s worth knowing that latest figures released by the Australian Bureau of Statistics reveal our capital city home prices rose 0.5% in the June quarter of 2012.
Commenting on the figures, JP Morgan economist Ben Jarman said, notably, “The house price data was a strong result.” Elsewhere, HSBC chief economist, Paul Bloxham added that the RP Data Rismark July ‘capital home value data’ showed values increasing for the second consecutive month.
They might seem like small numbers, but there’s no question that, in contrast to Europe and the USA, Australia’s property market continues to be particularly strong.
A recent analysis released by Reuters stated “Australian home values are just 5% below their lifetime highs. Recently, prices have begun to tick up again, thanks to lower interest rates and a sound banking system still willing to lend.”
All this spells excellent news for prospective buyers in the property market right now. The consistent demand means you can invest with confidence. The same applies to investors, as the rental market shows no sign of cooling off in the face of falling vacancies – “below 3% across the nation’s capitals,” according to SQM Research.
Are you feeling a spring in your step?