Is now a good time to buy? The banks are lending us more, loan repayments have dropped and house prices appear to have stopped falling.
But rate cuts happen for a reason and the global economy seems to be spluttering – partly driven by fears of a trade war.
Historically, there have only been two causes of recession in Australia; unemployment and high interest rates – and both play into the 2019 home buyers’ favour.
- Interest rates are at record lows and likely to get lower; already we are seeing rates that start with a 2
- At 5.2 per cent unemployment is below the 6.5 per cent it reached due to the Global Financial Crisis and the Reserve Bank wants to drive it down further
However, it’s a mixed bag for the future of the economy. The Westpac-Melbourne Institute Leading Index, which indicates the likely pace of future economic activity, has turned positive for the first time since November last year. It rose from –0.09 per cent in June to +0.05 per cent in July.
At the same time, Key Purchasing Managers Index (PMI) figures show a deterioration in Australian business conditions, impacted by a lack of confidence across the economy.
And the spate of bad news on the quality of apartment construction does not help confidence
Undoubtedly, the immediate future is uncertain. But, for property, the fundamentals remain strong. Australia’s population clock will roar to beyond 25½ million within the next six weeks, having first passed 25 million just a year ago.
This is something worth bearing in mind when we see headlines about apartment ‘oversupply’.
Australia is a long way from boom conditions, but its even further from recessionary conditions.
Rush in to the market and you could regret it if you don’t do your research
Is now a good time to buy? Probably.