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Buying real estate is something most Australian aspire to do at some point in their lives. Whether you’re looking to enter the Australian property market for the first time, purchase your dream home or secure an investment, it pays to know what’s happening in the industry.

Australian Property Industry

Here’s what we know are the current trends in the Australian property industry and how they may affect you.

1. Oversupply of Apartments

Over recent years there has been an unprecedented level of apartment developments, particularly in Melbourne and Brisbane’s CBD. This has resulted in an oversupply of apartments which isn’t great news for investors as potential for sale price decreases.

2. The Sprawl will Continue

As median prices continue to rise in inner city areas across the country, more buyers are looking to move further out. Driving the sprawl is the affordability of award-winning new home designs in Melbourne, Sydney and Brisbane. The prospect of larger property sizes and the possibility of a lifestyle change are also big draw cards.

3. Baby Boomers Staying put

With fewer properties coming on the market this year, homeowners are choosing to stay put and renovate rather than upgrade to a new home. Baby Boomers in particular, are choosing to stay in the family home rather than downsize due to the cost and high demand of medium density property.

4. Demand by Foreign Investors will Increase

The influence of foreign investors, mainly the Chinese, on the property market continues to be strong. While in previous years they were mainly focused on inner city apartments, overseas buyers are growing interested in house and land developments as well as some of the premium suburbs in Melbourne and Sydney.

5. An Increase in Rent-vesters

Instead of being priced out of the market, more Australians are looking at rent-vesting. This means people are buying a property in an area they can afford and renting a property in the desired location they want to live in. The tenant then helps pay off the mortgage of the investment property while you get to remain in your favourite neighbourhood.

6. Political uncertainty will affect the property market

2016 saw the controversial presidency of Donald Trump. While it remains unclear the impact of Trump’s victory on foreign investors, it has been speculated Australia could be seen as a good safe haven for a long-term investment. In regard to interest rates, if the US Federal Reserve chooses to increase their rates, this will likely influence the Reserve Bank of Australia to do so too.

7. The peak of the boom may have past

Australia has been going through a record-breaking property boom for the last five years, especially in Sydney and Melbourne. But, there is growing evidence the peak of the boom may have past as construction activity slows. This could spell an economic fallout and put pressure on homeowners and investors who over extended during the period of low interest rates.

The Property Market Bottom Line

Every year is an interesting year for the Australian property industry. While some may think it’s a good time to sit on the sidelines and see what happens, others are continuing to pursue their goals of investing in Australian real estate.

Foreign investors and those who are looking for long-term investments are likely to ignore the political uncertainty and reduced construction demand and continue to buy up. This year, it will pay to ensure you research potential assets before you make the purchase as not all properties and areas will increase in value. Weighing up the risks and your reasons for purchasing a property will be as important as ever.

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