Why people are optimistic about the current real estate market in Australia

28 Nov 2016

Have you recently been concerned about how the Australian real estate market would affect your financial future? Worry no more! People are becoming more and more optimistic about the market, and they have good reason to be seeing the light.

With the population of Australia rapidly growing, a strong national economy and the constant presence of overseas investors, the property market is not likely to crash in the foreseeable future. This is meaning people can be confident that when they buy a home, they're making a great investment.

Why has confidence been dwindling in recent times?

According to the Foreign Investment Review Board, overseas investors look at Australia as a safe haven for their money. When these investors buy here, they know that their properties will be popular, or at least tenanted regularly, because of the growing population.

Investors aren't necessarily dominating the Australian property market anymore.Investors aren't necessarily dominating the Australian property market anymore.

However, it's the presence of these investors that has caused so much concern. The average buyer was concerned that they wouldn't have the required capital to stay competitive in the bidding process. Westpac Australia states that people buying as owner-occupiers can have a deposit between 5 per cent and 20 per cent of the total amount of the home – depending on the lender and whether or not they want to pay for Lenders Mortgage Insurance.

People have started to realise that they can compete with any other buyer in the same price bracket.

An investor will need the same amount, whether they're a local or from overseas. They might have more money for a deposit, meaning they can access a larger home loan, thus bid more for a home. If the property is going to be competed for, it's unlikely that your initial bid is going to be the final one anyway. People have started to realise that they can compete with any other buyer in the same price bracket, meaning they have more confidence in the market overall.

Why is this good news for the Melbourne market?

As buyers become more confident, they will become more active in the market. This is great news for sellers, because there will be plenty of prospective buyers wanting to bid for their property. The more bidders, the more potential there is for the final sale price to be well above the market value. That might mean more profit for some people, pushing them to become less apprehensive about listing homes.

These factors are helping to contribute to a heightened confidence in the property market, which is good news for buyers and sellers alike. More homes for sale in Melbourne means more options for buyers, and more chances of capital gains for sellers.