5 Factors Driving the Real Estate Boom

Even in the midst of this pandemic, property prices are continuing to surge, so what is driving this current property boom.

Demand v Supply

It’s no secret that when demand is high and supply is low, price increases.  At the moment we have such a shortage of properties and buyer demand is at an all time high, which means prices are reach extraordinary levels.  We’re finding sellers are fearful of getting out of the market without having somewhere to move into.  Couple this with the fact there is also a shortage of rental properties, sellers are waiting longer for their dream home to come along before committing to sell.  Until we see a levelling out of the market, property prices will continue to rise…and rise.

Record Low Interest Rates

I remember a time when interest rates were as high as 18%!  Yes, I know, it sounds unbelievable when you look at what financial institution are offering today.  We are seeing rates as low as 1.25% on offer and, from what I hear, these rates appear to be here for quite a while; some are saying this will last for the next 5 years.  For investors, first home buyers and those wanting to upgrade now is the best time to act.

Uncertain Times

With the continuing lockdowns and complete uncertainty for what the future holds, many people are seeking stability and the comfort of bricks and mortar.  The security of knowing you have a place to live, when so many are trying to find a rental property, means sellers are holding on to their property longer and not willing to take a risk in this market.

New Investors

As lockdown and border closures continue, many people are finding they have a source of funds they previously used for travel and holidays just sitting in their accounts earning nearly no interest at all.  New retirees are also finding they have surplus funds which normally would have been spent on, say, a cruise or a motor home and the associated cost.  This means many who would normally not have considered buying an investment property are now seeing this as a great way to secure long-term extra income.  This factor combined this with low interest rates have millions of Australians becoming new investors or investing further into the residential property market.

Parent’s Help & FOMO

As with other facets of our lives, fear of missing out on something is a very strong driver to act.  As the interest rates are so low and people are finding they are now able to meet loan repayments, the only factor stopping them getting into the housing market is the deposit needed to secure a loan.  It’s a big ask, but many people are asking, and receiving, their parents’ help to secure their first home, whether it be using their own home as capital or providing a lump sum payment.  This is becoming more common and helping to increase the number of people actively looking to buy.

Remember, if you need any help or advice, we are just a phone call away.

All the best, Simon.

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