The real estate market in Australia has been on a bit of a roller coaster ride throughout the last few years with prices rising and dropping dramatically over that period of time. Prices throughout Australia continue to fluctuate depending on the region.

Many Are Not Listing If Not Necessary

The fluctuation of prices has caused many Australians to delay putting their houses on the market, adopting a wait and see viewpoint instead. Some Australians who do not need to sell their homes are waiting to see how the market will respond before making the plunge to list it. Even though the prices in Australia continue to fluctuate some areas of Australia are showing signs of recovery and hope. Still other areas are struggling significantly.

First Time Home Buyers Provide Relief For Struggling Market

The silver lining for Australian home owners who wish to sell their property has been the First Time Home Owners Grant provided by the government. This grant has allowed a great many first time home owners to afford to purchase a home. This group of people has helped to boost the sagging housing market. The low interest rates being offered have also been instrumental in helping to stabilize the housing market in Australia.

It Might Not Be Enough

Despite the benefit that first time home buyers have provided to the slumped housing economy, some experts feel that it may not be enough to really trigger a housing recovery. So far a large percentage of the purchasing activity for new and already built houses in Australia has come from first time home buyers. Some people feel that in order for Australia to really recovery from the previous housing woes that it has experienced then other buyers will have to enter the property market soon.

Sean Rasmussen
Property Options Australia
Property Options Blog © 2006 - 2008

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In our first installment we looked at the trend of unlikely areas receiving an upswing in home sales and interest as a result of the First Home Owners Grant and boost. Here we will continue to explore this unusual and interesting phenomena.

First Time Home Buyers Make Up The Bulk Of Those Purchasing Real Estate

First time home buyers are making up a large percentage of house hunters right now as a result of the Government First Home Owners Grant. First time home owners can get an added boost of $21,000 for newly built homes and $14,000 for already existing homes through the end of September.

Extra Money Helps New Home Buyers Afford A New Home

This extra bit of money offered to first time home buyers has helped many of them to realize their dream of owning a home and has also helped to stimulate the market in lower end areas that were faltering before. These areas tend to be more affordable to people who are taking advantage of the first home owners grant money. The faltering upper end of the market has only increased the boost to the lower end of the market.

Lower Interest Rates Add To Market Boost

Another reason why the lower priced housing market is seeing such an increase in property sales is due to lower interest rates and a desire by many Australians to have smaller homes and easier to manage mortgages. These factors help to boost the sales on the lower end market homes. These same factors are hurting houses that are priced on the higher end of the market. Houses with as price tag of 1 million dollars or more have seen a significant decrease in sales over the last year.

Property Options Australia
Property Options Blog © 2006 - 2009

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With the New Year here many people are looking at making 2009 the year they buy a new home. And with government incentives to help first time home buyers now is a great time to get that home that you have always wanted. Some areas are more desirable than others to buy a home in. Some of the places that are considered to be hot spots for 2009 include Sydney, Melbourne and Brisbane. There are also some regional areas that promise to provide great buyer appeal in the coming year.

Gauging The Temperature Of Real Estate In Australia

The real estate market in Australia proved that it can stand the test of time in 2008 showing resiliency and fortitude. Despite the fact that many share markets fell an average of 40%, house prices held fairly steady showing only an average decline of 1.5%. In 2009 there will be many factors that will drive the market either up or down. These factors include:

• Falling interest rates

• Affordability

• The cost to rent houses or apartments

• Investment yield potential

• And an undersupply of available homes

These factors will help to drive the prices of homes up. The areas where the most growth will be seen are in the areas that exhibit many of these factors. Also the government grant opportunity to double the money given out expires at the end of the fiscal year, so home buyers will be looking to take advantage of that while they still can.

While markets that have these driving factors are expected to do well in 2009, some markets are not expected to do well at all. Markets that are already affluent and where the demand has been reduced are not expected to experience good growth in 2009. Another area that is not expected to do well are vacation homes, and areas that are dependent upon holiday travel and tourism. This is due to the fact that in 2008 many people had to unload these extra homes due to financial difficulties.

Sean Rasmussen
Property Options Australia
Property Options Blog © 2006 - 2009

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The Australian recently reported on the worst places to buy a home in Australia. Here is the list of the top thirteen areas that made the list of undesirable places to live or buy a home in Australia. These are also areas that the Australian advised property investors against looking into.

1. Bankstown, Western Sydney, NSW
2. Blacktown, Western Sydney, NSW
3. Darwin, Northern Suburbs, NT
4. Dinmore, Brisbane, Queensland
5. Esperance, Southeast, WA
6. Giru, North Queensland
7. Kalgoorlie, Outback, WA
8. Katherine, Outback, NT
9. Lyndhurst, Melbourne, Vic
10. Mount Isa, Western Queensland
11. Parramatta, Western Sydney, NSW
12. Shepparton, Northern Vic
13. Sunshine Coast, Queensland

The list shows that most of Sydney’s western suburbs have been included as areas that should not be invested in. Parramatta, Bankstown and Blacktown have become areas with high levels of home repossessions. When an area has a high level of house repossession it tends to drive the prices in that area down due to the diminishing appearance of the houses that have been vacated. Bankstown and Blacktown have also been an area where ethnic tensions and high crime rate have dominated the scene making it a less desirable place to live. Many people also were turned off by the noise from overhead aircrafts that dominates that area.

Melbourne’s Lyndhurst and Brisbane’s Dinmore made their appearance on the list due to observations made on the property market over the last 25 years that garnered concerns about the value of property in that area dropping dramatically. If you are looking to invest in a home it is best to avoid areas where the value of the property will continue to drop.

Giru made the list due to problems with flooding and Shepparton tops the list for high levels of crime. Esperance and Kalgoorlie are considered to be over priced and polluted, which makes for a bad combination.

Sean Rasmussen
Property Options Australia
Property Options Blog © 2006 - 2008

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Many real estate experts are cautioning Australians that are eager to take advantage of the First Home Owner Grant offered by the Federal Government to proceed with caution due to falling prices in most areas of Australia. The median house prices throughout most of Australia has been dropping at a steady rate since 2004 and show no signs of beginning to climb back up again.

Finding the Balance

Some experts have stated that even though the Government is offering generous handouts to first time home buyers it can be a risky move to purchase a home at this time. Obviously the First Time Home Owner Grant is intended to boost the economy and help new home buyers get into a home. The concern is that new home buyers will bite off more than they can chew by borrowing hundreds of thousands of dollars in an economy that is not doing so great due to unemployment rates and declining house prices. Over the last five years the average house price has dropped 1.8% and the median price for a home has fallen to $270,000. In some areas such as Campbelltown and Leumeah prices have dropped as much as 2.4% this year alone.

Benefits Of Down Markets

While some may argue that the best time to buy is when the market is down due to the lower prices of homes, many experts are concerned that home buyers may find themselves with a negative equity if the prices continue to drop after they have purchased their home (which is why the low-risk of property options is favorable consideration). That would mean that Australians would end up owing more money for their home than what it is worth. On the flip side, if a person is looking at buying a home as a long term investment and plans on staying put for a good many years then investing in property now and getting in while the prices are lower may be a good idea, especially with the additional funds being offered with the First Home Owner Grant.

Sean Rasmussen
Property Options Australia
Property Options Blog © 2006 - 2008

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