Inflation is slowly creeping on all the countries in the world. Several countries are already affected and this negatively impacted the global economy. Sectors and professionals are scrambling to make sense of the situations and find ways to survive. The real estate industry is not exempted from this race. We all know that affordable housing is a must for every citizen of a country. A country that can’t provide good housing to its citizens needs to change its policies. This is why the Australian government is concerned about the growing prices of real estate in the country. Agent Barry Humfrey gives reasons why real estate prices have fallen in Australia.
Barry Humfrey is an agent that sells real estate to those who are interested in buying properties in Australia. He has been doing this job for nearly a decade and has amassed lots of experience.
The Fall of Real Estate in Major Australian Cities
Major cities in Australia have been plagued with increases in house prices. Initially, Sydney hasn’t recorded a fall in the price of properties. However, this changed last week when the price of properties plummeted in Sydney. In Victoria, homes for sale in Toongabbie have remained relatively consistent though.
Furthermore, real estate analysts have said that the price of houses in major cities has fallen. While other cities like Adelaide, Brisbane, and co remain unaffected by the change in real estate value. The Australian Bank announced an increase in the interest rate as an attempt to regulate the inflation affecting Australia. The declaration made by the Bank is another indication that the prices of properties will keep plummeting. A business expert sees the increase as a substantial one compared to the previous prices. It indicates a better interest rate that will bring normalcy to the economy.
All these give loan institutions the chance to tighten their criteria for obtaining a house loan. The law also limits the number of times a client can take loans. Similarly, banks have decided to raise interest rates on loans given to their clients. This is not favorable to their clients who have acquired houses with loans in the previous year. This is because houses were pricey some years back. However, for new clients that are interested in purchasing houses, it could be different for them. New house owners hoping to venture into Real estate might get a chance to make a good and safe investment. Otherwise, will they be better off with other business ventures?
What has made the prices of real estate properties plummet in the city of Sidney?
A real estate financial analyst gave a breakdown of the reason why prices of homes have decreased. According to him, the Australian real estate industry has enjoyed an increase in recent years. However, things have not been the same in the last two years.
The analyst further said, “The growth of real estate was more than 25%, and has only decreased by 2%. The decrease is not much in the eyes of potential home buyers in Australia.” He attributed the slight price decrease to the reduction in interest rates in Australia. The Australian government also has something to do with the decrease when it injected cash into the country’s economy. The injected fund stimulated and slightly boosted the economy of the nation. The government couldn’t inject more due to the national debt incurred during the pandemic.
What’s worse, the Australian economy is facing recession, and this has affected many sectors like the real estate sector. According to the analyst, few properties are for sale during this time, and those on sale are too expensive. So even if the prices fall a little, the poor Australian citizens can’t afford to buy properties.
Some houses were unsold at the end of last year when the hike in price peaked. Gradually, house properties have bounced back to the limelight nowadays. This must-have led to a low record in the price of properties. These issues have brought about ample increment in home properties, which have been on the high side. The 30% increase in price can not be justified. Although clients that work remotely might want better, more beautiful homes to stay in. Homes built close to the coast attract remote workers more.
Will Real Estate Prices Fall Further?
It might be possible for real estate prices to fall, but the amount will not be a significant one. There are speculations that properties might have a decrease of twenty or twenty-five percent in price. Unfortunately, there are fewer vacancies in rentals than before. Furthermore, restrictions are put on land, which is difficult for Australians to get affordable accommodations. Therefore, it is safe to say that property prices may not be affordable within this year, 2023 or 2024. Many people are hopeful though that interests may not rapidly rise and the country’s economy will improve in 2023. But finance experts are not so optimistic about these opinions.
The Australian government needs to do something about the rising house prices in Australia and do it fast. There is no time to waste as many citizens are left with no choice. They squat in tiny apartments with their friends and families to have a roof over their heads. Investors are not left behind as they complain about the unfavorable conditions of real estate investment in Australia.
Barry Humfrey advises the government to review the land Acts and interest rates to facilitate housing development in Australia.