Based on how the Australian property market has been performing, you may be wondering if now is a good time to buy and sell Inner West property. And with house prices going up across the world, even in the midst of the pandemic, there are fears that we might be facing a housing bubble.
Is a housing bubble imminent?
According to CoreLogic figures, and as reported by Bloomberg Research, local housing prices have jumped since the property lows of the pandemic. Sydney house prices were up by 11.2 per cent in 2020, while Melbourne’s rose by 5 per cent. Places like Canberra, Hobart and Darwin experienced double-digit increases.
The continuing increase in residential property prices in the country, including housing in regional areas, has placed Australia in 15th place in the new global rankings for the biggest bubbles by Bloomberg Economics.
Several key factors have been identified as contributing to the unprecedented rise in global housing prices. These include very low interest rates, fiscal stimulus, people’s lockdown savings waiting to be used as deposits, lesser housing stock and positive expectations of global economic recovery. All of these key elements can be observed in the Australian setting, where a lot of homebuyers have been making the most of the ultra-low interest rates to purchase their first home.
With the growth in the number of Australian remote workers, other homebuyers are upgrading to larger residences with sufficient space for them to set up a proper home office. Some have even moved to regional areas in the hope of finding bigger property at competitive prices. Of course, this is no longer true since prices in regional areas have risen dramatically as city dwellers moved to the relative safety of the country at the height of the pandemic.
Moreover, with travel and other leisure activities stalled for the greater part of 2020, buyers have had extra cash saved during the lockdown and now have the money to make a deposit on a property they like – and the number of properties worth investing in is going down.
Another factor identified for driving up prices and sales is FOMO – the fear of missing out. This is why, even with rising property prices, there are always serious home buyers ready to buy.
Buy now, then sell
If you’re planning on downsizing or upgrading your life, this time may be right to buy now, and then sell your own property. With prices continuing to rise, and a shortage of quality housing stock, you might be better to lock in a price now on the expectation you will be able to sell your home in a rising market.
The good times – including low interest rates and fiscal stimulus – can’t last for long.
In fact, the Big Four banks (ANZ, CommBank, NAB and Westpac) all predict that the Reserve Bank of Australia (RBA) would increase its interest rates long before its 2024 timeline. The key drivers of this possibility are the robust labour market conditions and wage increases that could prompt the RBA to start normalising monetary policy by the end of 2022.
Therefore, you should seriously consider buying a property now while you can still afford it. Of course, if you already have an Inner West property ready for sale, now is also a good time to sell as the demand is higher than the supply.
Looking for help selling your home or renting your investment property? Our team at Belle Property Balmain support homeowners across Balmain, Balmain East, Birchgrove, Rozelle and Lilyfield. Feel free to get in touch for a no-obligation discussion or property appraisal.
