The buying is still great for property investors and first home buyers, right now, since the price correction saw Sydney prices drop 15 after peaking in mid-June 2017 and the prices in Melbourne dropped 10%.
However, the great buying window is set to close in 2020 because of the rapid price recovery in Sydney and Melbourne since the Reserve Bank of Australia started cutting the cash rate in June and then another two times down to a record low 0.75 per cent.
With record low interest rates, prices began recovering quickly in Sydney and Melbourne. From August to November 2019, dwelling prices lifted 6.2 per cent in Sydney and 6.4 per cent in Melbourne. In November alone, prices increased 2.71 per cent in Sydney and 2.25 per cent in Melbourne.
The price drop along with government incentives has seen a flood of first home buyers jump into the property market. In 2014-16 the number of first home buyers stepping into the market was around 7500 per month from figures released from the Australian Bureau of Statistics.
However, since prices started falling in 2017, the number of first home buyers entering the market has averaged 9500 per month. This extra influx of new buyers, along with the lower interest rates is now having an upward effect on property prices.
Investors have been a little slower to jump back into the market with investor finance numbers so far not showing the same strong growth as new home buyers, however we expect investors number to grow in 2020 thanks to record low interest rates, that could go lower in February along with current low prices in Sydney and Melbourne.
Somewhere in 2020, as more property investors head back into the market, there will be a tipping point, where new home buyers will find it increasing difficult to compete with the rising property prices as more investors head back into the market.
What does this mean from property investors?
Given the current record low interest rates and lower prices – right now – is the best time to be securing your first of next property investment. So, if you want to get in ahead of the property investing crowd in 2020, be sure to give the team in here at Plan Assist a call – ASAP!