A new report suggests that the property market in Australia is heading into a period of sustainable growth, both on the supply and demand side. The findings from Deloittes’ Australian Mortgage Report 2014 (“the Report”) show that 2015 was likely to see a continuation of the strong price growth seen through 2014, as well as a lift in housing supply and further demand from both investors and owner occupiers. The findings are particularly interesting for anyone looking at investing in property in the near future.
The Report is published annually, and is a summary of a roundtable discussion between representatives of some of the biggest banks, credit unions and lenders in Australia. The main discussion covered a range of topics affecting the current market, including expectations for the coming year and challenges for brokers. The outlook was mainly positive for the property market – indeed the subtitle of the Report was “Let The Good Times Roll” – although this was tempered by a little uncertainty about the state of the Australian economy as a whole.
The main findings were as follows:
The increased demand from people investing in property and higher levels of migration will continue to support a strong market in the capital cities, and particularly in Sydney, Melbourne, Brisbane and Adelaide.
- The continuing low interest rates means that it is likely that buyers would continue to enter the market, which in turn will mean continuing higher property prices into the foreseeable future.
- All the indicators point to low mortgage stress among Australian households, meaning that that they are comfortably able to service their debts. Buyers are also happy to borrow more than they might have a few years ago. This may change if interest rates rise during the year.
- Access to credit remains high thanks to greater competition between lenders and lower funding costs for the banks.
- A large increase in property construction was expected in 2015, with an influx of new properties on the market expected during the year.
Interestingly, the Report also suggests that increasing house prices means that building or buying a brand new property (or an off the plan apartment) becomes an ever more attractive prospect. This idea is further bolstered by the significant stamp or transfer duties that people investing in property can take advantage of (although the rates vary from state to state), as well as reasonable deposit rates for off the plan developments and favourable investment loans.
Anyone interested in investing in property should look at all of the available options, including off the plan and brand new properties before making a final decision. Having a long-term strategic plan that has been developed with professional assistance can also help to clarify your needs and create a clear pathway to a future successful property portfolio.