Every time a capital city property market goes through another boom cycle, and even run down Sydney homes now go for millions at auction, many renters die a little inside, thinking their home ownership goals are getting pushed further and further out of reach.
It’s no secret that property along Australia’s east coast is seriously unaffordable, with many young people struggling to afford even a studio apartment in Melbourne or Sydney.
Surely, the bubble has got to burst at some point, right? Well sorry, but those waiting for a bubble to burst shouldn’t hold their breath.
It was once inconceivable that the median house price in Sydney would ever reach $1 million but, low and behold, that’s the situation we are now in. So let’s fast forward and have a look at property predictions a few decades ahead.
It will still be expensive. With Australia’s growing population, especially in Sydney, Melbourne, Perth and Brisbane, prices will be higher. That’s basic supply and demand principles. This can also cause cities to become extremely apartment dominated, similar to New York with fewer people living in houses because they were priced out of the market.
People often discuss it, but as someone who invests both in Australia and America, I don’t expect there will be any US-style property crash in Australia either. This is mainly because of our growing population and the fact that Australian mortgages are structured differently; meaning homeowners can’t just walk away and hand back the keys.
So although there will be flat periods, like usual, over the next 20 years expect to see prices be at least 50 per cent higher than what they are today. I expect that we will see another two boom cycles in most parts of the country. The more houses we can build, the more affordable house prices will be, hence the push with the first home owner grants for new property, but I don’t believe we will keep up with demand from population growth and millennials entering the market.
Moral of the story is to get into the property market as early as you can. As the saying goes, the best time to plant a tree was 20 years ago. The next best time is today!