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The latest update in the Australian property market

Published on December 1st, 2020
  Written by 
Bill Tsouvalas
Bill Tsouvalas is the managing director and a key company spokesperson at Savvy. As a personal finance expert, he often shares his insights on a range of topics, being featured on leading news outlets including News Corp publications such as the Daily Telegraph and Herald Sun, Fairfax Media publications such as the Australian Financial Review, the Seven Network and more. Bill has over 15 years of experience working in the finance industry and founded Savvy in 2010 with a vision to provide affordable and accessible finance options to all Australians. He has built Savvy from a small asset finance brokerage into a financial comparison website which now attracts close to 2 million Aussies per year and was included in the BRW’s Fast 100 in 2015 as one of the fastest-growing companies in the country. He’s passionate about helping Australians make financially savvy decisions and reviews content across the brand to ensure its accuracy. You can follow Bill on LinkedIn.
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If you are a property investor or a home buyer you are probably watching the property market at play to determine your next move.

At a glance, you will find that major cities like Sydney and Melbourne are cooling down from their property price high, but it will remain relatively difficult for a first-time home buyer to get their foot in the door with their high prices.

However, with the fall of the giants, you will see the rise in other cities and suburbs on the outskirts of major cities growing. 2018 will see a few surprising changes in the Australian market and some relative dips that will cool the market. Here are five major updates that you need to be aware of.

RBA Cash rate will remain the same

The RBA board voted to leave the cash rate at 1.50% in December which is a welcome relief across the various property markets in Australia.

According to the Shadow Board, the likely hood of a rate hike within the next six months has decreased from 73% to 69%, which will help reduce the mortgage stress that is experienced by Australians.

Furthermore, experts predict household credit growth will slow down to 4.5% in 2018.

Despite the RBA rate remaining the same home loan customers are advised to compare their home loans with others that are available on the market. Some lenders are expected to raise the interest rate on loans despite the RBA’s decision not to increase the cash rate.

Sydney and Melbourne to cool down propping Perth to make a comeback

Sydney and Melbourne have seen its fair share of property growth that has some economist listing its property prices as ‘ridiculous’. Sydney’s growth rate has dropped to 9%. Chinese foreign investors are now diverting their attention from these major cities and are planning to invest their money in Perth which is set to make a comeback in 2018.

Experts advise that investing in Perth right now is the best move you can make as it has property that is available with low interest rates and prices.

Suburbs that have been living in the shadows of the Sydney and Melbourne are expected to have their time in the sun. Brisbane continues its healthy growth with property that is not overpriced and its better rental yields. According to HIA report, Brisbane remains one of the countries most affordable capital cities for residential land. Its median lot price is set at $239,500 which is less than Sydney ($470,00), Perth ($262,500) and Melbourne ($275,000).

Property market boom is expected from CBD outskirts

With city prices showing no sign of cooling down, people are looking for places within a 15- 30 km radius from the city centre. 2018 predicts the rise in more affordable prices in suburbs and apartments on the outskirt of CBD’s. According to News.com, there is an expected 10% drop in prices for high-density apartment prices over the next few years.

Credit Squeeze is set to ease

The slow-down in property boom for major property markets like Sydney and Melbourne are most likely caused by the regulations that have been put in place by APRA. This has caused banks to implement stricter lending criteria’s known as the “credit squeeze”.

If you are a home loan owner you can breathe a sigh of relief as banks are set to retain loan defaults at a minimum due to the current low interest rate environment.

Home loan consumers are advised to constantly compare and check the market to find a loan that can offer them a competitive interest rate that will help them get more value.

There will be no crash despite the cooling period

The various property markets in Australia will experience a cooling down, while others such as Hobart and Canberra are set to blaze, but a crash is nowhere in sight. It’s advisable to not always follow the trend by chasing hotspots that will not see much return in investments but choose property that will increase in value for the next years to come.

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This guide provides general information and does not consider your individual needs, finances or objectives. We do not make any recommendation or suggestion about which product is best for you based on your specific situation and we do not compare all companies in the market, or all products offered by all companies. It’s always important to consider whether professional financial, legal or taxation advice is appropriate for you before choosing or purchasing a financial product.

The content on our website is produced by experts in the field of finance and reviewed as part of our editorial guidelines. We endeavour to keep all information across our site updated with accurate information.

Approval for home loans is always subject to our lender’s terms, conditions and qualification criteria. Lenders will undertake a credit check in line with responsible lending obligations to help determine whether you’re in a position to take on the loan you’re applying for.

The interest rate, comparison rate, fees and monthly repayments will depend on factors specific to your profile, such as your financial situation, as well as others, such as the loan’s size and your chosen repayment term. Costs such as broker fees, redraw fees or early repayment fees, and cost savings such as fee waivers, aren’t included in the comparison rate but may influence the cost of the loan. Different terms, fees or other loan amounts may result in a different comparison rate.

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