Are we about to experience another property boom? John Lindeman, Head of Research at Residex, gives us his view.
From what you have being reading recently, you may well come to the conclusion that we are on the threshold of another housing boom similar to the early 2000s.
The facts are more sobering and our figures show that the first home buyer boom has died away, and in some areas small falls in prices have occurred. At the same time, last year’s surge in sales activity has created a wave of second and subsequent sellers using their newly generated equity to upgrade into better accommodation and this is likely to continue into higher socio-economic areas even as interest rates creep back up.
To this surge add the increasing numbers of baby boomers retiring from the workforce and seeking their final dream retirement location. Surprisingly, many of these are not heading for the far north coasts of New South Wales and Queensland, or similar clean green and pristine areas around our coastlines. Instead they are seeking locations within easy reach of the capital cities where their grandchildren live, such as the Mornington and Bellarine Peninsulas in Victoria, the Fleurieu Peninsula in South Australia, the south-east coast of Western Australia and the Illawarra and Central coast of New South Wales.
There is also a move by these new retirees to buy top quality units within capital cites, low maintenance havens a footstep or two away from the beach, the restaurant strips and all the facilities they desire. The importance of this phenomenon is that these retirees are generally trading down; they are buying for less than what their old family homes are being sold for. Consequently they are providing a new impetus to push prices up in such locations.
Are we then, about to see the biggest housing price explosion in our history? The figures suggest that what we are seeing is a normal growth pattern, higher in Melbourne and lower in Adelaide and Brisbane, but nothing untoward. The growth from housing upgraders will slow down as it moves into the upper areas of the market and eventually, will return to the lower end of the market when interest rates start to come down again.
Story Provided by John Lindeman
Residex Head of Research
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