The Commonwealth Bank of Australia (CBA) recently announced that house prices would continue to decline in the near future, based on indicators such as demand for housing finance, liquidation rates auctions, demand for residential housing and consumer sentiment with respect to price expectations.
"Evidence suggests that house prices will continue to deflate in the very near future. There will be significant variations between capitals and even suburbs in the same cities, but the general trend should be a continued decline in prices, "said CBA Senior Economist Gareth Aird.
The first evidence examined was the housing credit flow, which, according to the Australian Bureau of Statistics (ABS), continues to decline. In addition, the pace of the decline has accelerated. This acceleration is related to the decrease in the number of homeowner loans.
Hardening lending standards played a role, but "this is not the main factor in accelerating the downward trend in housing finance."
"On the other hand, the demand for credit has decreased because the market has grown and household expectations of real estate price appreciation have declined", declared Aird.
Second, the country's bid reconciliation rate has trended downward in 2018, recently falling between 40 and 45%. According to Aird, recent auction clearance rates suggest that housing prices in Sydney and Melbourne will continue to weaken in the very near future.
Foreign investment in Australian real estate has also cooled over the past two years. This was due to an increase in stamp duties imposed by the government on foreign investors, as well as stricter capital controls in China.
As such, it is projected that values ​​will follow a decline given the data collected, which indicates that the decline in demand from foreign investors is consistent with further easing of housing prices.
Aird added that at present, there is no sign of renewed demand from foreign investors in the near future.
"If households expect a drop in prices, demand for credit will decline and prices will adjust downward. The opposite is also true when households expect an acceleration in price growth, "explained Aird.
With interest rates at their lowest for over 50 years, there are excellent rates available. The best thing to do is to compare the rates of all the lenders. Let us help you solve this problem – Compare home loans now
Top suburbs:
East Victoria Park
,
sunshine
,
Geelong West
,
Torrensville
,
Toowong
Get help for your real estate investment
Do you need help in finding the right loan for your investment?
When you invest in real estate, it's important to make sure that you do not just have the lowest available rate that you can get, but you also have the features of ready adapted to your needs.
Just fill in a few details below and we will then do what is necessary for an Australian mortgage broker to contact you and establish a solution. What features or types of loans are suitable for your needs? We will even help with the paperwork. In addition, an appointment is free.
We value your privacy and treat all your information seriously – you can check
our privacy policy here
