Are investors saturating the property market?

Are investors saturating the property market?

There has been plenty of discussion over whether Australia is in a housing bubble and if not, whether there could be one just around the corner.

This has led to some concern among property market analysts, who fear the market could find itself balanced in the favour of anyone who wants to invest in real estate.

And who could blame them? With the cash rate staying at 2.25 per cent and home loan interest rates also especially low at the moment, the property market is ripe for anyone who has their eye on it.

Managing Director of the Perich Group, Tony Perich, is among those who fear a housing bubble could be on the horizon, and it may mean first-time buyers are priced out of the market.

In an interview with The Australian, he said "first home buyers should always be first in the line and they're not".

Another issue is that property prices are rising in some parts of the country, which could mean the playing field becomes more uneven as the years go by.

One way of keeping this at bay is to limit land price rises, which is something the development group has been looking to do.

There aren't many concerns over activity in the construction market in Australia, especially if data from the latest HIA-RP Data Residential Land Report is anything to go by.

Residential land sales continued to increase throughout 2013-14, leading to a growth rate of 10 per cent over the course of the past financial year.

However, the Housing Industry Association (HIA) acknowledged that land values have increased considerably over the past 15 years, which is a trend the country can't afford to see continue.

Land values in capital cities alone increased 1.8 per cent over the June 2014 quarter and were up 7.4 per cent over the course of the year.

Image credit: PT Money

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