I’ve heard reports and read various shock jocks once again touting that the great property crash is just around the corner. Not surprisingly, these are the same people who predicted a 30% drop in prices soon after the COVID outbreak, which never happened – in fact, the opposite did.
Yes, properties are expensive at the moment and this will stop some would-be buyers and investors from securing a good property, but this has nothing to do with the chance of a market collapse.
Properties in Australia have never crashed – there have been the necessary and predictable market corrections, with prices falling slightly in some areas. But homeowners don’t just sell up if the value of their house decreases by a few percentage points and nor do investors (which make up around only 15% of the property market) – why would they sell at a loss?
Property owners will generally sit it out and, as the history of the Australian market has always shown, prices will bounce back and then continue to rise again. This is the same property cycle that the country has experienced since we began keeping property price records over 100 years ago.
There’s also been talk of interest rate rises creating mortgage stress and resulting in thousands of homeowners defaulting on their mortgages; of banks repossessing the homes and selling them all off in fire sales that will flood the market with cheap properties and bring the market crashing down… does that sound like a likely scenario?
Does anyone really think that governments, the Reserve Bank, financial regulator APRA and the entire banking industry want this to eventuate or would even go close to it? Governments have spent trillions to keep Australia from a total collapse during the pandemic, so does anyone truly believe that they would allow a total collapse of the economy now? I don’t think so.
Interest rates will, in time, slowly increase but by very moderate amounts and this will only be done to slow inflation and wage growth. If wages were higher, then the majority of homeowners would have more money to pay the slightly higher interest rates. In fact, Australians are ahead of their mortgage payments compared to what they would be in normal circumstances and have more cash than pre-COVID times.
Australians love property and they love talking about property, which is why sensational headlines grab people’s attention – and we all know that bad news gets a lot more attention than good news.
These voices are a minority. So, if you want to invest in property, do your research, read widely from economists and trusted sources and think about what has happened to property historically.
Once you’ve done that and you decide you still want to ride the property wave, then South East Queensland is the perfect place to do it.
Dwyer Property Investments offers a full financial property analysis to all qualified buyers. Click the button below to arrange your free, no-obligation consultation or call me directly on 1800 088 437.