Stability of the housing market: What the commotion actually means
Last week analysis released by ANZ found Melbourne’s house prices likely to decrease by 10% throughout 2018 and 2019, causing commotion about future stability of the housing market.
Before concern sets in, it’s important to put the data into context, and remember that the market is always cyclical – buyers or sellers benefit at different phases of the property cycle.
Coming off a record up-cycle, we are now entering a slow-down. According to ANZ, unlike other periods of decreasing house prices the current downward cycle is being driven by banks pulling back on the amount of money they lend, rather than rising interest rates.
Additionally, it’s not abnormal for the market to experience a drop in both listings and buyer activity through winter.
As a seller, the reality is most vendors are still likely to fetch substantially more for their home today than one year ago. Melbourne house prices remain 2.2% higher over the year, having risen 40% over the five years to mid-2017 – a great return on investment whichever way you look at it.
As a buyer, the market dip is a welcome improvement to affordability, but don’t forget property is a long-term asset. Future fluctuations aside, your goal should be to find a property that’s within your budget today but has good prospects for capital growth over time.