Global markets have indeed taken a hit. Stocks crashed, investors got spooked and people stopped buying property. Prices seemed to drop overnight. Hundreds of thousands of dollars were wiped instantly off premium properties that were once being fought over with agents barely having time to breathe between sales. Houses remained on the market for longer terms than we have seen for the past 5-10 years, with inflated price tags and less people walking through their open homes.
Is this correction in Australian property prices, and the fact that Aussies have out a screaming halt into buying property, more to do with actions overseas, or on our own turf?
There is no doubt that the global markets have a flow on effect to Australia and indeed Australian property. We follow suit. The US market falls, the flow on effect carries to the Australian market. Which means money is lost, investors and mums and dads alike, take a step back and hold on to their cash. We enter a state of unrest and of inaction.
Yet, property is still a non-liquid asset, so any changes to the market around it, will take some time to take an effect. More than likely, the issues that will convert the Australian property correction into a crash could be factors on our own home soil.
The results from the Royal Commission continue to put unease in the market. Tighter lending criteria, investor restrictions and changes to investor tax cuts are all issues in play. Additionally, 2016 and 2017 saw a lot of interest-only loans approved to home buyers. These loans will soon be nearing the completion of their interest-only terms and switching over to a considerably higher principal and interest payment. All these factors alongside interest rates, employment and a potential change of government are leaving the market in a state on unrest.
What will the remainder of 2019 hold? Whilst we will keep a keen eye on international markets, we must not take our eyes off what is happening within our own country. We will continue to wait and see.