Fundamentals That Keep OZ Property Foundation Strong..

Australian property market is one of the most stable in the world because there are so many fundamentals keeping its foundations strong at every point in the cycle from peaks to troughs.

Let's go through few of them.

• Firstly, two out of three Australians own their own home or are living in a home with the owner and one in three are in a rented place. Of the 66% who own their home, half of these homes are fully paid off with no loan whatsoever.

• Next, let’s look at the generational change occurring, where many Baby Boomers (aged 60 to 75 approximately) are assisting their children secure a first home and of course as the life cycle turns, many will also be leaving their often considerable assets to their kids.  

• We are enjoying a robust economy, low levels of unemployment, record low interest rates and significant overseas immigration and investment. None of these are likely to change significantly into the future. After all, we are the lucky country.

• On top of this, our country has a unique population concentration with just under 70% of Australians living in one of only eight capital cities. This concentration, coupled with a chronic undersupply of housing, particularly in Sydney and Melbourne, keeps a rock-solid platform under home values. 

• APRA can help ease regulations to stabilise the falling market if we start seeing rapid falls.  

• RBA still has room to move with cash rate currently at 1.5%. Most of the economist are predicting next move upwards sometime mid to late next year but if tsunami was to hit our shores, we will see RBA dropping the rates. 

Property market has been declining slowly in Sydney and Melbourne and it will likely continue the trend next year too.

Post that, we will see market stabilising or holding on it's feet for few years before growth picks up again .. 

Only time we will see crazy drop of 35%-40% (predicted by Steve Keen and Harry Dent) is if financial catastrophe engulfs the entire world...

Jazz Sidana
FinanceBoutique