The 3 Key drivers of the property prices:
This is an extract from a new article by Peter Wargent 18-05-2020
Also, other property researchers. Cameron Murry & Jonathan Tepper, Boyle.
Source: CoreLogic, ABS, ANZ Research & Barry Ison.
1. SUPPLY - the rate of construction and the properties listed for sale on the market;
2. INTEREST RATES - the cost of borrowing; and
3. POPULATION GROWTH - immigration, natural population growth (births minus deaths), and interstate migration.
People often state that the unemployment rate is critical, but this argument isn't backed up by any hard statistics.
In fact the last couple of times the unemployment rate spiked housing prices soared the following year, as pointed out by Stuart Wemyss of ProSolution, Game of Mates author Dr. Cameron Murray, and others:
The last time we had unemployment numbers this bad we saw Sydney house prices increase by 13% the following year.
After the 2009 jump in unemployment Sydney prices increased 16% the next year….
BOYLE'S 3 DRIVERS TODAY
In that context, here's what's happening with Boyle's 3 key drivers today.
Supply is extremely tight at the moment.
Dwelling construction is plunging towards 70-year lows and vendors aren't listing either
Lending rates, meanwhile, are at the lowest level in modern history
This effectively allows borrowers to take on bigger mortgages, as I showed in my recent post on lending trends
The big unknown factor at this stage is POPULATION GROWTH.
My base case expectation or scenario is that within the next few months the powerful interests such as the Property Council, Australia's universities, the airlines, Tourism Australia, and big business at the top end of town will have forced the government's hand to reopen the borders, albeit with a period of enforced quarantine.
The idea that Covid will change the way we live completely absurd and sensationalistic.
The 1918 influenza killed over 50 Million people.
Afterwards we had the Roaring 20’s
People won’t want to stay cooped up like they are now.
And moreover, Australia will likely be seen as one of the safest and most desirable countries on earth in which to live
With vacancy rates low and rental rising we can expect property prices to follow and increase.
The bottom line of this is, Real Estate has over recent times been a safe haven when other markets crash in Australia.
With interest rates at an all time low what a great time to invest in Real Estate.
Contact me now to see where your next investment could be in the Australian Real Estate Market.