The Australian property market has experienced considerable growth over the long term as housing values graduallyincrease every year. That’s why so many Australians want to own their own home or delve into property investment to build wealthover their lifetime. As the cash rate increases for the third month in a row, it’s important to note that the value of your own home is also increasing.
For the first time, the combined value of Australian residential properties exceeded $10 trillion in March this year, doubling in value over the pastseven years ($5.1 trillion in 2014). These promising valuesindicate that the market is steadily growing over time, a positive signfor homeowners. While those Australians who are yet to enter the property market may feel waryofthe increasing prices,the historically low interest rates right now provide an opportunity for first-time buyers to secure a low interest loan before rates continue to rise.
According to the Australian Bureau of Statistics, the average price of residential dwellings in Australia was $920,100, an increase of $44,000 since the September quarter of 2021. The growing value of Australia’s 10.8 million dwellingsis due to record low interest rates and strong demand. According to CoreLogic, dwelling values are 11.2% higher over the past 12 months, as every capital city has experienced a peak rate of growth. With both gross rent yield and rental value remaining high across the country, it is a profitable time for investors who are currently in the market or looking to enter.
While there is uncertainty in the market regardingthe increasing interest rates, it is not the first time Australia has experienced challenges in the market, having always managed to bounce backfrom downturns. The average interest rate from1990 until2022 has been 3.87 percent, which indicatesthat the current rate, at 1.35% (July 2022)is significantly lower than previous rates over the years.To control inflation, the cash rate is likely to continue rising over the near future; but according to the RBA, the inflation rate is expected to drop back to the target range between 2 and 3 percent next year.
The negative media attention surrounding the RBA’s monthly decisions may ignite uncertaintyin Australians. With record low interest ratesand risinghouse values, it is still asuitable time to enter the market and work towards yourproperty investment goals
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