Every news story about property price trends tells the same story. Property prices have surged strongly since March 2020, and they show little sign of stopping.
So what should first home buyers do? Wait for the bubble to burst, or get in before prices rise even higher?
Property price trends for 2022 remain strong
Forecasts for the 2022 property market are mixed, but most experts agree that buyer demand is likely to stay strong for a while yet.
The COVID-19 pandemic has shifted our focus towards home. Apartment living holds a lot of charm if you spend most of your time in local bars, out at the theatre or socialising in community play spaces. Less so during lockdown. People have realised the value of an extra bedroom or a private garden, and they’re willing to pay for it.
Demand for free standing homes soared during lockdowns, and the stock of established property plummeted. That’s unlikely to change any time soon. As buyers shift their focus to building a new home instead, those prices too are likely to rise.
Consumer confidence is another driver of property growth. As Australia looks likely to become one of the most vaccinated countries in the world, that confidence is back. The economy is rebounding, the unemployment rate is falling, and inflation remains low. These are all indicators that could lead to increased borrowing power and higher prices.
Following the COVID-19 pandemic our focus has shifted towards home with demand for free standing houses soaring to new heights. Featured here: Scarborough Grand, Smiths Lane Estate, Clyde North
Will the bubble burst?
While we don’t have a crystal ball, all indicators point to no.
Bear in mind that the Australian real estate market is heavily regulated. Unlike the US sub-prime crisis of 2008, Australian property has always stayed relatively stable. APRA creates rules around lending practices, while the RBA sets the cash rate that determines interest rates. This makes it incredibly unlikely that we’ll see a dramatic drop in property prices any time soon.
However, some banks and property experts are looking towards 2023 for a possible softening of the market if interest rates rise.
The main reason why property price trends have maintained their upwards trajectory is that interest rates are at rock bottom. The RBA has indicated very strongly that they don’t intend to raise them any time soon. However, if house prices keep rising, a slight correction may be necessary. If so, that’s tipped to be no sooner than mid-2023. Any rise is likely to be gradual and cautious. The days of double-digit interest rates are long gone.
Interest rates are at rock bottom so there is no better time to buy your brand-new dream home.
Waiting can be risky
If you’re trying to break into the property market, sooner is better than later. Property price rises might slow down, or they might stay as they are. Either way, history suggests that prices will go up, not down.
Even if there is a slight correction in the market, it’s likely to be short lived. Between 1985 and 2015, a period encompassing both the 1990s recession and the 2008 Global Financial Crisis, Australian house prices increased on average by 7.5% per year.
As with any asset, trying to time the market is a risky business. If you buy to hold, you don’t need to worry about short term volatility. For a home that you’re building to live in, this is especially true. You’ll benefit from long term growth, save on rent, and best of all: own somewhere that you love.
Building your own home with a Carlisle House & Land package means you can take advantage of today’s prices to secure your home for the future. Whatever the latest property price trends, you’ll benefit from a fixed price package that’s completely transparent.
Carlisle Home’s House & Land packages help you take advantage of today’s prices to secure your home for the future.