Australian housing trends in the coming year
December 19, 2013 / Written by Rich Harvey
The real estate market in Australia reflected the Asia Pacific market as a whole during 2013. In short, it was booming.
"Despite an uncertain economic backdrop, the fundamentals of real estate markets across Asia remained for the most part uncompromisingly strong throughout 2013, with cap rates tightly compressed and transaction volumes rising going into the fourth quarter of the year," stated Emerging Trends in Real Estate 2014, a report from PricewaterhouseCoopers.
The report went on to say that going forward, one of the biggest obstacles for the property market in Australia will be contending with "fierce demand".
While part of this demand is being driven by historically low interest rates, much of it also comes from the fact that there are just not enough properties on the market in some areas.
This is an issue home buyers should consider, especially in regions such as Sydney.
A December 18 release from Urban Taskforce Australia made the case that a growing population will only add to issues caused by a lack of inventory.
"Every few months we seem to see even higher projections for Australia’s population growth announced by the [Australian Bureau of Statistics]," said Urban Taskforce CEO Chris Johnson.
"While there has been some uplift in housing production over the last year it is clear that significantly higher numbers of new houses and apartments are urgently needed. The NSW population has grown by 102,000 in the last year but we are still not providing sufficient housing to meet demand."
According to Mr Johnson, 10,000 less homes than are needed are built in Sydney each year.
However, this news doesn't just impact property investment in Sydney.
While population growth in NSW reached 1.4 per cent, according to the latest ABS statistics, Queensland posted growth of 2 per cent, showing that population growth can affect Queensland investment property as well.
Demand for housing throughout Australia is also sure to be spurred on by a continued low interest rate environment.
According to the January issue of Your Investment Property, interest rates are forecast to stay low heading into 2014. This makes obtaining home finance more affordable for many borrowers, translating to more activity in the property market.
Buyers agents more important than ever
One trend that will continue heading into the new year is the value offered by a buyers agent in Sydney and beyond.
High demand and a shortage of inventory in major markets means it's easier than ever for a property buyer to overpay.
Fortunately, buyers agents are industry professionals who specialise in searching for, evaluating and negotiating the purchase of property. However, unlike traditional seller's agents, buyers agents work on behalf of the property buyer exclusively.
With both inventory and population concerns sure to drive up property values, it's important to have a professional on hand who can negotiate on a buyer's behalf.
Buyers agents can also source properties based on specific criteria, undertake some home inspection duties and bid on behalf of a buyer at auction.
Of course, in order to take advantage of the current market and where it's likely to go, investing in property sooner rather than later seems preferable.
Values are likely to increase moving forward, especially in hotspots like Sydney. This means that buying now could be more affordable than waiting. Additionally, with demand set to rise due to population growth and a lack of inventory, finding a property now will likely be much easier than in the future.
