New research by Mortgage Choice reveals the majority of Australians are optimistic about the property market and will keep investing.
Data collected by the mortgage brokering firm showed 64.3 per cent of Australians believe the housing market will maintain its performance from the last few years, and even possibly improve.
“This data makes it obvious that the majority of Australians remain upbeat about investing in property and will continue to buy and sell dwellings,” Mortgage Choice CEO John Flavell said.
“According to data from CoreLogic, property price growth has started to stagnate in recent months. Over the three months to November, property prices grew just 0.4% across the combined capital cities.
“As a result, many market commentators have started to panic and are suggesting that this is the beginning of the end. Some commentators have even gone so far as to suggest we could soon see a property price crash across some of the bigger markets, notably Sydney and Melbourne.”
Mr Flavell, however, said the reality is that property prices are just stabilising after a few years of substantial growth, and should have been anticipated.
“The fact is, significant changes have been made to investment lending policy in recent months. Moreover, interest rates have been sitting at historical lows for well over 12 months and will continue to sit at historically low levels for some time yet. Both of these things have combined to take some of the heat out of the market.”
Despite Mr Flavell’s comments on heat being taken out of the market, he also believes there is no chance of a crash any time soon.
“For a crash to occur in the housing market, there would need to be a number of economic factors at play,” he said.
“Firstly, supply would need to be significantly high enough that it exceeded demand. Secondly, the cost of borrowing money would need to rise rapidly in a very short period of time, and unemployment would also need to reach dramatically high levels.
“Moreover, there would need to be a large number of people looking to liquidate their properties at the same time.”
If those factors were evident, then a crash would be a real possibility to consider, but as they are not, Mr Flavell said: “It is fair to say that we are not in for a crash”.
With the Australian Bureau of Statistics recording a population growth of 1.6 per cent over the last year to March 2017, and unemployment trending down over September by 0.1 per cent to 5.5 per cent, Mr Flavell said the need for more property by those who can live in it are at healthy levels.
For those who intend to improve their portfolios, Mr Flavell recommend now is a good time to achieve any goals investors may have with interest rates at all-time lows, lenders looking for borrowers and some markets stagnating.
“If you have plans to be in the property market, now is the right time [to] achieve your goals,” he said.