Residential property: Ongoing strength anticipated
Enviably low mortgage interest rates have been a key driver of the strong price growth in the residential property market, according to the Residential Property Prospects, 2014 to 2017 report from BIS Shrapnel.
It's expected that price growth will continue between the 2014/15 year through to 2015/16 - news sure to be welcomed by investors and existing homeowners alike.
By 2016/17, price declines are expected, paving the road for those with less financial leverage to take out variable or fixed home loans.
What's been keeping the market buoyant?
A number of factors have contributed to strong residential property markets over the last 12 months in Sydney, Perth, Melbourne and Darwin, notably low interest rates and tight markets.
Brisbane's market is turning itself around, with the Sunshine State capital tipped as the top contender for the best price growth during the next three years.
"[A]ffordability has improved significantly after weak price performance in recent years, and low dwelling construction means there is a sizeable deficiency in place", BIS Shrapnel noted in a June 23 statement.
"The momentum in the Sydney market is also expected to continue for now as the market is estimated to still be in deficiency. However, as rising new dwelling supply works its way through to completion, pent up demand pressures will ease and the strains on affordability as interest rates rise will take their toll, leading to a forecast price decline by 2016/17."
With growth anticipated in key cities over the next year, before slowing and tailing off, there's still time to capitalise off favourable capital gains.
BIS Shrapnel Senior Manager Angie Zigomanis explained that the current average variable interest rate is the lowest level seen in more than 40 years, with the exclusion of the emergency rates put in place during the global financial crisis.
With affordable loan products available, homeownership is still proving to be a boon for Australians.
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