A Few Signs of a Property Market Slow Down

After decades of increasing prices the Brisbane real estate market has started to show signs of slowing down. In recent months, prices have flattened, which is a new development in a market where house values have increased every year in recent memory.

House prices were last stagnant in the period after the recession of the early 1990s. During that time, property prices did not move much at all. There was no property crash, as such, but the value of people’s home barely increased.

Towards the end of the decade prices started to move again. The 2000s then brought one of the biggest property booms in history. The average price of property has risen every year during that time and has showed little signs of slowing. Increases in property prices have far outstripped increases in average salaries, leading to a calibration issue with these two metrics.

While analysts have been saying for years that prices can’t continue to increase at the same rate they have been, not much has changed. Homes have become largely unaffordable for many young families as investors continue to snap up properties and banks offer more flexible mortgage products.

However there are finally signs that prices are about to plateau. Figures released recently show that the average price of a home in Brisbane has increased by only 0.1%, or one basis point, over a one month period. This is big news despite the fact that prices increased as opposed to decreasing. It is one of the smallest monthly increases in the average value of property in many years.

This is cause for celebration in some quarters, particularly those where people are being priced out of the market. Young couples, individuals and families as well as low income earners have been arguing that they’ve been priced out of the market for years. If property prices start slowing down, more young and low income workers might be able to afford a home.

While the statistic is a positive sign for people hoping to buy their first home, it is not welcome news for property investors. There are many people in Australia who invest in property and Brisbane is a target market. People usually invest in property as a way of providing for their retirement. Investors hope that prices will rise over time so they will have lots of equity to draw upon in their retirement years. Slowly increasing property prices is therefore not welcome news to investors.

The same could be said for real estate agents. People become reluctant to put their homes up for sale when the market is turning south. This means that there will be less business out there for real estate agents to do and they will, in turn, make less money through commissions.

However it is far too soon to suggest that the real estate market is heading south. The market might be slowing down for a short period of time, but there are no signs that a crash is on the way. Property prices in Brisbane should be healthy for a while yet.

6094427