Real Estate Investment Trends
With 2017 coming to a close, real estate investors are busy analyzing market data to find out what awaits them in the next year. And if you are thinking of investing in real estate, but do not know how to estimate the market characteristics for 2018, then this post will certainly be helpful. Below, we look at six real estate investment trends you should expect in 2018.
Real estate prices, especially in cities like Melbourne and Sydney, have been increasing for the past few years. However, this price rise is expected to dampen starting 2018, and you will likely find that more properties are available in the market at a much more suitable price point. This stabilization of prices will also attract a lot of new first time homebuyers who might have avoided investing in real estate the past years. In Melbourne, despite dampening prices, the supply of homes is rather limited. This will ensure that home prices in the city will be at stable levels all through the year.
Australia has been witnessing a kind of a golden run in recent times as far as employment growth is concerned. As per the records of the Australian Bureau of Statistics, more than 12 million people were employed in the country as of July 2017. Jobs have been growing at a brisk pace that unemployment fell to one of the lowest rates ever in September at just 5.5%. In fact, the Australian economy experienced the best annual employment growth in 2017 since 2005. This trend of employment growth is expected to continue well into 2018 and beyond, making sure that there will always be first time buyers looking to purchase their own homes. And combined with the price stabilization that is expected for the year, we should see more homes being sold.
While novice real estate investors who have been lucky in riding the real estate wave of the past years may think twice about investing in property due to a lackluster price growth in the next year, the opposite is expected to happen in the case of professional investors. When it comes to long term investment, most smart investors follow a simple logic – buy at dips. This essentially means that you wait for the price of a property to stabilize to invest in them. And the dampening of home prices in 2018 will be seen as a huge investment opportunity by such smart real estate investors who will be looking forward to taking advantage of it.
Population growth in Australia is also expected to continue in 2018 and the years ahead. For the year ending March 2017, the country’s population grew by more than 389,000 people, bringing the total population close to 24.5 million. And most of the population bump (almost 60%) is thanks to net migration, which added around 231,000 people to the country. Cities like Victoria, NSW, and South Australia accounted most of their population growth to migration. In fact, Victoria registered the highest population growth of 2.4% last year due to the huge influx of new migrants. And this actually helped the real estate market by enabling it to avoid an oversupply of homes and apartments since the migrants ensured that these properties were bought off or rented. And with the population growth of Australia projected to increase over the coming years, the demand side of the real estate market is expected to remain robust.
As far as interest rates are concerned, it is expected that the Reserve Bank of Australia (RBA) will desist from increasing them in 2018. With the real estate market stabilizing next year, the RBA is less likely to feel the need to control it. Another factor that could impact RBA to think along this line is the fact that the Australian economy is yet to function to its fullest potential. And with a not-so-strong economic growth, we can expect the RBA to keep interest rates steady at 1.5% all through the next year.
For the past five years, housing demand has grown by an average of 164,000 units per year. The continued population growth is expected to increase the demand by 5% to about 172,000 new housing per year over the course of next five years. This figure, combined with more business investments in cities like Brisbane, Melbourne, and Victoria over the coming years will also play a huge role in keeping property prices stable while ensuring that there is neither oversupply of units nor excess demand from new buyers.
So, if you are thinking “Is 2018 The Right Time To Start Your Property?”, then the above points should have given you a positive confirmation. As such, the only thing you have to do is to find out low-priced, high-quality homes in a good neighborhood to invest in.