No housing bubble for now | Ralph Lauren

Must Read


Looming tighter lending conditions are likely to stop Perth property from falling off a cliff, leaving experts to hold off labelling the metropolitan area’s rapidly rising market a housing bubble.

Known for sparking the 2008 Global Financial Crisis, housing bubbles occur when there is a sharp rise in home prices until unsustainable levels are reached and values nosedive.

REIWA was already forced to revise its 2021 property price forecast from 10 per cent to a 15 per cent jump after heated market activity in the March quarter, while ANZ has estimated a 19 per cent leap.

Though Perth buyers are in the middle of a thumping, CoreLogic has only observed a slight increase in the number of high-risk loans and has not yet found the property scene to be dangerous.

The data analytics firm has also not found substantial relaxation in lending standards and has speculated high prices and impending credit constrictions will dampen the market.

Raspa Property Group Director and Licensee Principal Lou Raspa said he didn’t believe Perth was at risk and the capital was actually benefiting from an economy stronger than it was before COVID-19.

However, he did say the possibility of a housing bubble could be more readily avoided if more people chose to palm off their properties.

“One of the biggest factors driving the current market is the lack of supply,” he said.

“A balanced property market in Perth would typically carry 12,000 to 12,500 properties for sale, but this market is currently sitting around 4000 to 4500.

“The last time we saw stock at this level was over 10 years ago.

“Like any other commodity, supply and demand influences price.

“Should we see an increase in the number of properties for sale we may start to see a more balanced market return.”

With Perth in the midst of a boom, Mr Raspa urged buyers to conduct thorough research before making an offer on a property to ensure they weren’t overpaying for a home.

The real estate agent said he had seen multiple sellers competing with each other to secure a property, which was pushing sale prices upwards.

He said people who kept failing to buy were at risk of letting their emotions get the better of them and paying more than a home was actually worth.

“Another consideration for buyers is their borrowing capacity,” Mr Raspa said.

“While interest rates are the lowest they’ve ever been and are likely to remain that way for the foreseeable future, buyers need to also be very cautious when borrowing.

“The banks are very keen to lend and buyers need to ensure that while they may have the capacity to service their loan today, they will also be required to service their loan if and when interest rates do rise.”

In January, Australian mortgage lending hit a record of 28.8 billion, reflecting a 34.8 per cent spike from the decade average.



Source link

Leave A Reply

Please enter your comment!
Please enter your name here

Latest News

Doohan caps big day for Aussie offspring | Ralph Lauren

Jack Doohan has capped a huge day for the offspring of Australian motorsport royalty, winning his maiden Formula...

More Articles Like This