The decision to buy a home isn’t one to take lightly. There are any number of things to consider throughout the process, from saving for a deposit to completing your home loan application – not to mention hunting down a home that fits within your budget! Fortunately for prospective home buyers in Sydney, the future may hold plenty of opportunities to enter the real estate market.
So what conditions might convince you to take out a home loan? Let’s take a look.
House price growth slowing
When you’re weighing up your real estate options, price is one of the biggest elements of the equation – particularly in a booming market like Sydney. There has been furore around rising prices in the Harbour City, but new research from BIS Shrapnel could bring some relief. The Property Prospects report 2015-2018 predicts that price growth will slow significantly over the next three years, and even decline in real terms in Sydney.
According to CoreLogic RP Data’s latest Home Value Index, dwelling values in Sydney have expanded 16.2 per cent over the 12 months to June 30. What’s more, the BIS Shrapnel report reveals that the median price has swelled 45 per cent over the past three years to June 2015. These are sizeable increases, but BIS Shrapnel Senior Manager Angie Zigomanis doesn’t expect this to continue in the medium term.
He points out that higher interest rates in the coming years, falling demand and increasing dwelling supply could offset some price pressure. In fact, the report expects median house prices to rise just 2 per cent over the three years to June 2018, a real decline of 6 per cent over the period.
“Completions will continue to rise, and the slow erosion of the deficiency will also coincide a forecast tightening in interest rate policy over 2016/17,” Mr Zigomanis said.
Construction supporting affordability
The property market in New South Wales has faced a daunting obstacle: Supply. While demand for property has continued to climb, there haven’t been enough homes to meet the needs of the population. However, the state looks to be improving its position. New figures from the Australian Bureau of Statistics (ABS) show the total number of national dwelling approvals rose 2.4 per cent in seasonally-adjusted terms during May, with NSW gleaning the benefits.
There were 57,088 new dwellings approved over the 12 months to May, according to the Property Council of Australia, which NSW Executive Director Glenn Byres said is a promising sign for affordable housing. He noted that maintaining the current growth in approvals is important to keep pace with population growth, reduce the supply deficit and help households get a start in the property market.
“NSW needs to keep driving supply if we’re going to tilt the balance of affordability back in favour of home buyers,” Mr Byres said.
There is still a way to go before the gap is closed, but this data could be a positive token of things to come.
With prices set to slow and approvals on the rise, buying a home in Sydney could make a lot of sense. Talk to our team of lending experts at Police Bank for help finding the right mortgage to meet your needs – and your budget.