The Australian property market refers to buying and selling of real estate properties. It is influenced by various factors, including supply and demand dynamics, economic conditions, population growth, government policies, and interest rates. The property market has turned the corner and prices are steadily moving higher. By 2024 we will have found that the boom is firing on all cylinders, and price rises will be scorching.
A boom in the property market in Australia can be caused by the following factors:
- Low-interest rates: When interest rates are low, it becomes more affordable for individuals and businesses to borrow money for purchasing properties which can lead to a boom in the property market.
- Population growth: A larger population creates a need for more homes, which can result in increased property prices and market activity.
- Limited housing supply: When there is a scarcity of available housing relative to the demand, the imbalance between supply and demand can create a sense of urgency among buyers and lead to increased competition.
- Economic growth and stability: A strong and stable economy often leads to higher purchasing power. When people feel financially stable, they are more likely to invest in property, which can contribute to a boom in the market.
- Government policies and incentives: Government initiatives such as first-home buyer grants, tax incentives, or relaxed regulations can stimulate demand in the property market.
- Infrastructure development: The development of new infrastructure, such as transportation networks, schools, and commercial centers, can increase the desirability of certain areas and raise property prices.
It's important to note that these factors can interact and influence each other, and the impact can vary across different regions within Australia.
1: Rate Cuts
Lower interest rates surely make property purchases more attractive. Its increased demand led to a potential boom in the market. The rate cuts increase investment activity in the property market by offering benefits to existing homeowners.
The rate cuts influence investor behaviour. Investors might shift from stocks to safer investments that offer income.
2: Credit Easing
The Australian government may introduce policies or initiatives aimed at promoting lending and increasing credit availability, including targeted programs for first-time homebuyers or specific industries.
Credit easing measures can have implications for borrowers and lenders in terms of accessing and providing credit for property transactions. The APRA has addressed potential risks in the housing market. APRA has indirectly impacted the lending standards and requirements imposed by financial institutions.
3: Immigration
Net immigration will raise the demand for housing to buy and sell. The immigrants choose rentable properties. Immigrants have housing preferences based on their cultural backgrounds and socioeconomic circumstances.
4: Rental gains
The balance between rental property demand and supply can impact rental gains. It is dependent on the location and type of property buyers want. As rental prices rise, the increase in return on property assets pushes demand up even further.
5: Construction Crunch
The limited supply of new housing enters the market which results in increased competition among buyers. Factors such as labor shortages or material supply issues can cause delays in property development projects which leads to a fall in housing construction.
6: Foreign buyer demand
The regulations regarding foreign investment may impact the level of demand. It aligns with national interests but fluctuates with the changing market conditions and economic factors.