“The great Aussie property boom is over.
All of those gains were due to decreasing interest rates and easy lending.
Now that higher rates are here for the foreseeable future theres no way the next three decades will look like the last three. ”
Chances are you’ve heard this line of reasoning. If only property economics were so simple.
The future is unknowable but there are clues as to why we might expect another sustained property boom.
Property Supply
Current housing supply is anaemic. Spiking material costs, reduced lender appetite for developer finance and a lack of available labour have put a stranglehold on residential construction.
Housing Demand
Australia needs a significant and sustained increase in skilled migration to address shortages across many employment sectors. We also need to design and build the infrastructure required for the momentous shift to green energy. As one of the most world’s desirable places to live we will continue to attract the ‘cream of the crop’ and they’ll all want their slice of the great Australian property dream.
Generational Wealth Transfer
The ageing baby boomer cohort is in decline. At just 21% of the population boomers hold more than 53% of Australia’s wealth including around 80% of the equity in our nine trillion dollar residential property market.
This immense wealth is being transferred via inheritance and other means such as gifting, family trusts and financial instruments. This enables younger generations to leverage equity in family assets and access much larger deposits for increased buying power and less reliance on borrowing.
Legislation is also in play to reduce the tax liabilities which discourage retirees from selling the family home to downsize- which will increase cash and property liquidity for buyers and sellers.
Not all suburbs and property types will perform equally. Some will stagnate and some will shine, depending on the new drivers of the property economy.
No one can definitively say when the next boom will begin but the time to act is now.
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