Paul Hill Realty - Australian Real Estate Boom

Detecting a Boom Cycle

It’s easy to detect a boom cycle after the fact, yet anticipating which areas are set to surge is significantly more difficult.

In spite of the fact that there’s no certainty that property prices will either rise or fall, it’s essential to know about the signs of a boom cycle.

Supply and Demand

The way to understanding a boom cycle and making a wise investment revolves around supply and demand. To lay it out plainly; as supply surpasses demand, property prices fall, and when demand surpasses supply, property prices rise.

As suggested by Tim Lawless (CoreLogic’s Research Director) the equilibrium of supply and demand, for the most part, dictates housing values. Therefore, it’s important to comprehend what impacts this balance.

Keeping an eye out for factors that could influence either side of the equation is fundamental to getting ahead of the curve. CoreLogic tracks posting numbers intently, in addition to building activity, to check market supply.

Shortage of supply in the midst of rising demand can cause prices to rise. Real estate demand can be harder to investigate and distinguish as there are more factors that sway this side.

Demand can be impacted by investor activity, migration trends, monetary policy factors (e.g. interest rate settings), finance availability and government incentives (e.g. the Queensland First Home Owners’ Grant or Stamp Duty Concessions).

Large infrastructure projects, for example, mining projects or new gas refineries can have a sharp yet short-term impact over demand, frequently in the midst of supply limitations.

What are the Signs of Property Market Boom?

It’s difficult to foresee a boom cycle with 100% assurance, however, there are key signs that may point towards rising house costs.

As the connection between supply and request is continually changing, there are approaches to remain in front of the market by understanding certain pointers.

The four key signs the property market is set to boom are:

  1. Diminishing Inventory Levels in the Midst of Rising Buyer Activity

    As demand increases and while supply drops, accessible properties will in all likelihood increase in value. For instance, an inflow of interstate migration has seen rising buyer action in Queensland.

    Combined with an 11.3 per cent drop in the number of listings, this hike in buyer activity certainly will impact housing prices.

    The most recent Queensland Market Monitor shows the median sale price for properties in Queensland rose by 1 per cent in the 12 months leading up to September 2020.

  2. Shortening Selling Time

    This represents an unmistakable spike in demand and is another indicator that prices may rise. At the point, when properties are on the market for less time, it’s clear demand is high and may lead to shortening supply levels if the market doesn’t oblige.

    The effect of shortening selling times could be seen last year on the Gold Coast, throughout the September 2020 quarter. The annual median house price in this area grew by 3.2 per cent as the annual median days on market dropped by 12 days.

  3. High Auction Clearance Rates

    This for the most part means that the market is growing. It shows buyers are more inclined to pay the sellers reserve price or become the highest bidder. This represents another indicator of increased demand and will commonly mean that house prices are rising.

  4. Falling Interest Rates and Improving Credit Availability

    The falling interest rates and improving credit accessibility is a sign that house prices may ascend because it’s a lot simpler to borrow and invest.

    Truly, Australian house costs have reacted positively to this. Also, falling interest rates make investing more easily achievable, and gives first home buyers more of an opportunity to enter the market

Now is the time to take action and set yourself for the opportunities that will present themselves as the market booms…

Paul Hill Realty has built up a reputation of giving exceptional service as well as going above and beyond the normal expectations that a property investor can expect.

Paul Hill Realty are Specialists in Residential Property Management on the Northern Gold Coast from Southport to Ormeau and west to Wongawallan. However, know the complete South Eastern Qld area well so can list any property in South East Qld.

Get in touch with one of the Paul Hill Realty Hope Island experienced team members by calling 07 5577 1888.

Property Market Boom – Property Market Boom