Housing Bubble: What’s The Plan?

It’s no secret that house prices in Australia are on the rise, and a lot of people are concerned that the growing bubble will soon burst, dropping house prices far lower than before, and leaving property owners in trouble when they can’t get a good price when selling. But while there may be some instability in the future, it might not hit everyone and everywhere in the same way. So what can you expect?

What’s A Bubble?
First of all, let’s make sure we’re all on the same page. A property bubble is when there’s far more demand than supply, pushing prices far beyond what they would normally be. This naturally leads to developers and builders wanting to make and sell more properties to meet demand, but once prices are higher than people can afford, they stop buying, leaving a lot of properties still on the market without any demand for them.

This is when the bubble bursts, causing prices to drop quickly, and leaving people looking to sell their property less likely to make a profit.

What Can You Expect?
Luckily, Brisbane most likely won’t be as affected as other cities. Both Sydney and Melbourne have seen annual price growth of 18.9% and 15.9% respectively, which is most likely unsustainable. With Brisbane having a more modest 4.6% annual growth, and with most of the housing oversupply being focussed around cities and metropolitan areas, we’re less likely to be too badly hit if and when the bubble bursts.

What’s Being Done?
With the recently announced Federal Budget, the government is trying to gradually deflate the housing bubble, hoping to avoid a market crash. They’re planning to implement several policies, such as allowing first home buyers to salary sacrifice up to $30,000 from their superannuation for a property, and to set up a Treasury task force to focus on improving housing affordability. However, these are all still plans, and needed to be approved by Parliament before coming into effect.

The upshot of it is that while you should pay attention to the economy, there’s no need to panic at the moment. If you’re thinking of selling, now can be a good time to capitalise on the current trend, but you can also talk to any of our agents to get an in-depth look at what your local market may be like in the future.

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