Is the property market actually crashing?
If you’re a millennial thinking about buying property, you might be delighted to hear the news that the market is ‘crashing’.
Unfortunately, this ain’t no crash. Property prices peaked a year ago and since then we’ve seen an 11-month fall, but according to property data firm CoreLogic, the cumulative decline is just -2.2 per cent. In July, CoreLogic said prices were still more than 30 per cent higher than they were five years ago.
There’s a difference between a correction and a crash
In short, this is a very reasonable price correction. The market was hot. It’s now warm-ish, thanks to a tighter lending.
Let’s be real. This two-bedder in Bondi has an asking price of $900,000, so despite the decline, ownership will still feel like a distant possibility for many of us. But if you do happen to have a deposit ready to go, maybe you can bargain ‘em down to $850,000 in this market.
While it’s impossible to predict exactly what the future holds, a dramatic ‘crash’ seems unlikely as long as new residents continue to settle in our major cities. Melbourne’s population currently sits at five million and is expected to bulge to more than eight million by 2050. That’s a hell of a lot of people looking for a home.
Should I buy now?
It’s a better move than it was a year ago. Even if the market continue to stagnate, it’s important to remember that property is a long-term investment and keep up repayments until prices rise again.
In Melbourne, two-bedroom inner city units, like this one in Collingwood, are listed for more than half a million. So you’ll still need some decent coin on hand to secure a home. On the upside, you might face less competition and could be in a position to make an offer before auction or negotiate a better price in a private sale, particularly if the vendor has to sell.
As always, it’s about doing your research and due diligence. Look in suburbs that will continue to be desirable in a decade and beyond, so your investment retains its value, regardless of what the economy’s doing. Take this place in Glenelg, Adelaide, for example. It’s a freshly renovated two-bedder just streets from the beach and it’s going for $380,000 to $400,000. There’s little doubt that a smart buy will pay big dividends in decades to come.