Property market fundamentals – Low Vacancy rates = Great News!
As the negative media focuses on property ‘Doom and Gloom’ based on falling prices in Sydney & Melbourne, they forget the fact that a growing population still requires somewhere to live. There’s no doubt the price correction in southern markets has caused some concern for buyers who have purchased recently at over inflated prices, however the underlying fundamentals of the property market provide a little more insulation than some of the so called media experts give it credit for.
Real Estate, like any product is based on supply and demand, when supply contracts prices increase and if supply increases prices will relax. It’s very similar in the rental market, an under-supply of rental properties where there is demand (population growth) will see rental prices increase. The majority of Australia’s capital cities have low vacancy rates and many are continuing to decrease. A rental vacancy rate of 3% is considered to represent a balanced rental market, the article below illustrates exactly how strong our rental markets currently are.
In addition to this, a subdued lending environment over the past six months will impact on supply over the course of 2019. Strict lending criteria around development funding will restrict the delivery of new projects and subdivisions, while a reduction in investment lending will affect new property sales volumes therefore effecting the viability of some projects. The reduction in opportunities will benefit buyers who acted early with higher rental yields and capital growth.
Investgo Property Group believes that locations coming off Low Median Prices with strong economic opportunities and job growth, will provide buyers with excellent outcomes over the next couple of years, and locations with population growth will see the most Capital Growth. Based on these South East Queensland will continue to represent the most sensible place to seek opportunities in the near future.
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