Australia is a beautiful country, one which attracts many new inhabitants looking to live here every year. It is also already home to over 23 million people, many of whom are moving around between cities, towns, villages and the outback themselves. Therefore, there is a lot of competition when it comes to buying a house in the country. In 2017 there are a number of opportunities and challenges facing those hoping to buy a house in Australia.
Interest Rate Rises
Currently interest rates in Australia have been left on hold, with the official cash rate at 1.5%, having been cut to 1.75% in May and then to its existing record low in August. Rates haven’t risen in over six years, but many experts are warning that in 2017 that could change, though it looks unlikely to be at the start of the year.
If there are further rate cuts, or they remain at their current low level, then this will increase the incentive for homebuyers. This will see housing values grow even further and in certain areas could make buying a home unaffordable for those on lower budgets which potentially might weaken the AUD against the USD. There are expectations for banks to raise their own rates in 2017 as well, which could provide further financial problems for homebuyers. If that wasn’t bad enough Jeffrey Halley Oanda market analyst adds ‘[…the] Australian Q3 GDP fell [below] a consensus forecast of -0.1%. Household spending has failed to recover from a lacklustre Q2, and across other sectors, house construction […was] weak’.
Housing Affordability Crisis
According to one bank report, Sydney has the fourth riskiest housing market in the world, with housing prices experiencing a 45% rise since 2012. It peaked in 2015 and despite there being a boom in housing supply over the last five years, prices have continued to climb.
This has caused something of a housing affordability crisis in certain areas of Australia, mostly in the major cities of Sydney and Melbourne. There has been a call to action from economists, urban planners and community groups for the government to implement a strategy that includes more than supply to combat this crisis. Otherwise, 2017 will see housing prices continue to rocket in popular areas of Australia.
Cheap Living in Australia
There are plenty of places in Australia that provide affordable homes. The suburb of Liverpool, which is about 40km from Sydney’s business district, remains affordable with a potential boom thanks to a new airport on its way in nearby Badgerys Creek. While Eagle in Queensland offers similar prices for new buyers and is growing due to infrastructure developments in the corridor of Logan City.
For those hoping to live in Melbourne and Sydney there are many cheaper areas that are easily commutable from. In Victoria, Bendigo and Ballarat are a lot cheaper than buying in the big city, while Wollongong in New South Wales is as well.
Property as an Investment
Outside of Melbourne and Sydney there are many great opportunities to purchase property from an investment perspective. The capital city of Canberra is looking up, while Hobart in Tasmania also promises a lot of potential. Anyone after a bargain could look towards Perth and Darwin, where house prices are actually falling. This offers an affordable place to live and possibility of recovering prices in the future for decent returns.
There are challenges ongoing within the Australian housing market but still plenty of great opportunities for buying a new home in the country in 2017.
References & Sources:
Infochoice: Australian Interest Rates & Mortgages Comparison Site
Oanda: Forex Trading – AUD/ USD
The New Daily: Properties – Best Places to Live in Australia