The past few years has seen a real boom in property prices in Australia, especially for inner city living like Melbourne or Sydney.
I read a few articles last week that had said investors in Australia had turned to the property market to make money rather than the stock market, after the dot.bomb tech crash of 2001, etc. Apparently, 50% of money being lent by Australian banks for property is going to investors rather than first home buyers, which has pushed the prices of housing up incredibly.
What's not quite clear is how long this will last. High housing costs are pricing people out of the market, so much that many first home buyers can't afford to purchase a house in the area they grew up in. However since a lot of the property being purchased is investment property and for rent, rental prices are fluctuating, causing an ROI inbalance.
So what will happen? Many advisors are forecasting an over abundance of investment properties failing to find tenants for rent, causing a fall in ROI, and an eventual downturn sale of investment properties, driving prices lower. Others forecast continual growth with eventual stability being attained.
Regardless, even still with an abundance of places to rent - prices still continue to increase. When I lived in South Melbourne 5 years ago, the 2 bedroom apartment I rented cost around $250k AUS, today the same place is around $600k AUS, even more in newer areas like Port Melbourne, or the Docklands.
Definitely makes it difficult for people wishing to enter the market, and even more suspect when people forecast a downturn in prices (imaging taking our a house loan for $500k and seeing your property price decrease below that).
It will be interesting to see where the future takes us. Like all investments/purchases, I guess timing is the key :)
Posted by crafterm at September 28, 2003 11:45 AM | TrackBack