At the present time, interest rates are rising, inflation is running hot, and the rumours of recession in Australia and across the world continue to be spruiked. While the Australian property market has slowed from the highs of 2021, it is currently tipped to further drop in the coming months.
Fear and uncertainty among homeowners and investors are significant. However, with the forecasting errors that we have seen from banks and the RBA in the previous few years, many people are questioning the accuracy of such forecasts.
The Impact of COVID
At the beginning of the Coronavirus pandemic in 2020, many forecasters had predicted Australian property prices to drop by as much as 20 per cent. When you consider that in 2020, the property market was valued at $7.71 trillion, this would have resulted in the country’s property market dropping by more than $1.54 trillion.
In reality, by the climax of 2021, Australia’s property market actually increased to a figure of $9.95 trillion. This reflected a property value increase of more than $2.24 trillion.
The Current State of Australia’s Property Market
Australia’s property market has softened, with a national average reduction of 4.4 per cent from the highs of 2021. Some housing markets like Sydney have fallen by as much as 7.4 per cent during this same period.
Forecasters and banks are expecting additional declines, with a recent report from ANZ outlining a drop of another 20 per cent. If this comes to fruition, this would be the largest downturn ever experienced in Australia.
Such declines in the country’s property market are mostly driven by the fact that interest rates during the past five months have increased at a rate of 2.25 per cent. The measure has been taken as a means of combating the country’s current rate of inflation. With interest rates increasing so significantly, the monthly repayments on an average Australian mortgage have risen by as much as $733.
What Determines Property Prices in Australia?
Anyone who’s ever bought or sold a property knows that the prices can be quite unpredictable. But what actually drives property prices in Australia?
There are a few different factors that come into play. One is population growth. As more and more people move to Australia, the demand for housing goes up, driving prices higher. Another factor is interest rates. When interest rates are low (which is not the case at present), more people can afford to buy a home, which again increases demand and pushes prices upwards. Finally, there’s supply and demand. If there are more buyers than sellers in the market, prices will go up. Conversely, if there are more sellers than buyers, prices will come down.
Why is There Such a Current Demand for Property Lawyers?
The demand for property lawyers has been on the rise in recent years, as more and more people look to purchase or sell property. With the current housing market being so volatile, it’s no wonder that people are looking for legal guidance when it comes to buying or selling a home.
Property lawyers are able to provide expert guidance on a wide range of issues, from conveyancing to taxation. As a result, they are increasingly seen as an essential part of the property transaction process. With the housing market showing no signs of unpredictability, it is likely that the demand for property lawyers will continue to grow in the years to come.
Summary
While the Australian property market has slowed from the highs of 2021, it is currently tipped to further drop in the coming months. However, even with the recent reduction in property prices, Australia’s property market is one of the most stable in the world.
Despite fluctuations in the global economy, the Australian housing market continues to remain strong. This is due in part to the fact that there is a constant demand for housing in Australia. The population is growing steadily, and there is always a need for new homes.
In addition, Australia’s economy is relatively strong, which provides confidence for potential buyers. As a result, the Australian property market is seen as a safe investment by both local and foreign investors.
