The Australian property market boom in Melbourne and Sydney ended last year. The Australian housing market continues to decline as it feels the trickle-down effect from Sydney and Melbourne.
According to the Home Value Index, Australian homes average prices declined 0.6% to $554,263 this summer. This has been the largest decline in the past seven years.
Just in the last three months, Melbourne’s average property prices have plunged 1.8%, outperforming a 1.1% slide in Sydney. Three of Australia’s six capitals — Perth, Darwin and Canberra — and in addition costs in local territories likewise fell over this period.
According to AMP Capital Chief Economist Shane Oliver, he thinks that the Melbourne and Sydney housing market decline has just begun. He is predicting that prices in both Australian major cities are expected to plummet another 10-12 % in the years to come.
Chief Economist, Paul Dales expresses similar views as Shane Oliver. From the data and analysis provided by CoreLogic, Dales predicts that the worst is yet to come. The facts are in front of us. Dales says, “Prices in Melbourne are still only 3.0% below their peak, but they are now falling at a three-month annualised rate of 8.3%.”
Auction clearance rates in both Melbourne and Sydney continue to remain below 60%. These levels are quite characteristic with levels that have seen property prices decline in the past.
The trend in stricter lending standards has unquestionably been an influence on the housing market. It has hindered borrowers to get loans to fund their property purchase.
Major Australian cities like Melbourne and Sydney where house cost to wage proportions are fundamentally higher than different parts of the nation, these income related limitations have added to bigger value declines than the country’s average.
Many Economists are now questioning whether these borrowing limitations will be loosened, which will allow borrowers to pay for more expensive property or whether will be more restrictions imposed.
Given the ongoing patterns, and probability of larger price drops in the future, Dales states there’s not an irrelevant hazard that shortcoming in the housing sector will overflow into the more extensive Australian economy.
Empty land in Australia is becoming harder to find, so house and land packages are an affordable option for homebuyers looking to purchase in this convoluted housing market.
Many first-time homeowners can benefit largely from the First Home Owner Grant (FHOG) when purchasing a house and land package. For example, In New South Wales, as a homebuyer you will only pay tax on the land portion. Whereas, first time homebuyers purchasing an empty residential land are exempted from paying any taxes on vacant land valued up to $350,000.