Research from Core Logic suggests a decline in the national house prices in the month of February making it the fifth consecutive monthly decline. Judging from the rate of decline, it does appear that the credit tightening policies of lenders have worked to cool down the markets.
What’s does this mean?
Although markets may be cooling off at the moment, it is unclear if this is indeed a downward trending or just a correction in prices. Whatever it is, it appears that APRA regulations are having some impact on the housing markets.
To better understand the current and future trends, we must take a close look at factors in the economy that may contribute to the housing markets. For instance, take migration into our capital cities, especially Sydney and Melbourne. Reports from the Australian Bureau of Statistics, show that these cities continue to enjoy an increase in net migration overall.
People need housing and these trends are likely to put upward pressure on housing demand. With these cities still experiencing housing under-supply, prices may steady or take an upward swing.
So, what?
We continue to see movements in the housing market. With interest rates still at record lows, it’s easy to assume that lending activity would be high. However, the tightening lending environment has dampened activity somewhat. Considering the levels of net migration and demographic shifts with low housing supply levels, it’s only natural for an increase in demand which may keep the market from declining in the long term. As always, sticking to a long-term strategy as opposed to trying to time the market will be the key to success.
Markets will change and economies will adapt. It is important not to react but seek advice to ensure your strategies continue to remain relevant. Always seek advice whenever you’re in doubt.
General Advice Disclaimer
Note: – this article is of a general nature only and does not take into account your objectives, financial situation or needs. Please consult a qualified Financial Adviser, like Wealth Peak Financial Advice, before making any decisions on the basis of this article. Wealth Peak Financial Advice Ltd ABN: 24 615 007 326, is a Corporate Authorised Representative of Total Financial Solutions Ltd. AFSL 224954 and ABN 94 003 771 579
