Australia real estate continuous decline from what appears to be the last price boom for properties in the country. This is what the citizens will experience in the next several years, according to the Bank of America Merill Lynch.
The Australian real estate data indicated that the median prices in the capital city rose to only 0.2 percent, with an annual decline increasing by 6.6 percent year on year. The numbers are down from the 11.6 percent year on year peak last July 2015 and an April 2014 peak of 11.9 percent. With the country's real estate having low interest rates, there are new participants to the property market. With this, the expanded period of these conditions had dropped some marginal buyers who were more careful at the start of the cycle, according to a feature from the Daily Mail.
Although the decreasing house price growth had not entirely knocked the household confidence or spending, the Bank viewed that the oversupply would add to the apartment sector in the next 12 to 18 month. This increase would be seen specifically in the districts of Melbourne and Brisbane. While the bank anticipates these areas of apartment cost weakness to cause the further slowdown of price growth as well as lower volume of lbuilding approvals, the Bankf futher said it does not believe the likelihood of spilling over into the housing market, though the prices remain to slow down over the course of the year.
Having said that, the problem concerning the oversupply may take years before it can be resolved, given the decline in the numbers of Australian immigration which affects the slow increase in population. Those with investment properties that are heading on a downward spiral could find that they must keep these properties longer in order to achieve adequate capital growth. Fortunately, the low interest rate or the average rental loss per landlord had decreased from $11,000 in the years between 2010 to 2011 to just $8,700 for 2013 and 2014.
Australia's real estate slow growth, however, should not be a case for worry, according to RBA governor Glenn Stevens. House price moderation in some areas where they had been rapidly increasing, although not the exact goal of the leading measures, it is in fact, helpful, according to a feature by the Sydney Mording Herald.
