Are you watching the news, listening to radio and reading newspapers and wondering whats going on with the global economy, how does it effect you and is it a good time or not to buy property?
The Australian Government has provided many stimulus packages recently to boost the Australian economy. Globally, Australia is in a stronger position economically compared to most countries, so how does this effect you?
If you are currently renting, like many Australians are at the moment, rents are continually increasing and its harder and harder to find rental properties. The vacancy rates of Australian rental property are now below 3% and in most capital cities, its far below 1.5%.
Due to this fact, we see rental prices increase rapidly over the last twelve months and experts predict this pattern will continue for the next year to two years. The Australian average rental price in 2007 was $290 per week, however, realistically today, families are paying well over $380 per week.
The Australian population is rapidly growing, over 21,700,000 people. The current building and construction industry has had its major restrictions now as banks put further pressure and limitations to their funding. The numbers of new housing to be produced currently and in the near future are far below the number of demand we have in Australia. Currently we have a housing shortage of over 200,000 a year.
The Government has provided a First Home Owners grant and bonus recently and this has helped put a major injection back into the economy with over 35,000 people taking this grant over recent months.
Interest rates in Australia are by far one of the lowest since 30 years, at 3.00 cash basis points. This means that banks and lending institutions are offering rates around 5% and even some as low as 3.99% introductory rates. Home ownership is far more comfortable now than three years ago. Many property investors may have been struggling to maintain their investment loans previously, now find themselves either neutrally geared or positively geared.
Prices of current properties on the market are far more affordable as to this time last year. There isn't any major property crash in prices in compared to the Stock Market, however, we find many more affordable prices now. A number of developers and home owners are either dropping there prices or offering amazing incentives. This is definitely not a seller's market but profoundly a buyers market.
So what does this all mean? We find the property market in a very interesting period that we have not seen for many years, possibly in a lifetime. Rents are high, vacancy levels are scarcely low, interest rates are low, population is rapidly growing and a major shortage in new houses. Even in a current global crisis, Australian property market is in a very strong position. We find that this opens a window of opportunity for either first home owners or property investors. This window may only be open for the next year or so, as more than likely interest rates will rise again in the mid to long term, and consumers confidence in the property market shall return and property prices will start to increase once more.
If you are thinking to buy property and wondering if it was a good time to buy now or not, I hope this will assist you. Good luck, best wishes and may you be able to reap the benefits in a volatile market. Remember, where there's crisis, also lies opportunity.
As Warren Buffett mentions, "when people are greedy, you should be afraid, when people are afraid is when you should be greedy."