First-time home buyers in Australia have kept a close watch on residential property prices, which have been falling for almost a year now.
The pent-up demand among buyers manifests in capital cities such as Melbourne and Sydney. On the other hand, construction supplies might be more necessary with the boom in building projects in the second quarter of 2018.
Even if prices have dropped in recent months, most buyers are still waiting for the right time to bid for a house in the hopes of further declines. Sydney home prices have dropped by 5.6 per cent in the last 11 months, while the market in Melbourne recorded a 2 per cent decline in the past quarter.
The trend has been bad news for investors and homeowners, although it does not indicate a market crash. However, the pace of new home construction could further drive prices to a lower scale.
New Home Projects
The Housing Industry Association (HIA) said that new home building projects contributed a 0.9 per cent to the economy’s growth between April and June. If more homes get built, then sellers might have to lower their asking prices to find willing buyers.
While Sydney and Melbourne have lower home prices, most people still find them too expensive. Another problem involves tighter lending restrictions that mainly prevent investors from taking out interest-only loans.
Fewer people are likely eligible for financing assistance, which could result in a lower number of housing starts in the next two years, according to BIS Oxford Economics.
Home builders will have to make sure a steady source of construction supplies to avoid delays on project deliveries. The price slowdown in major Australian cities means more people are willing to buy homes, while homeowners are likely to renovate their properties before putting those for sale.