Is the Aussie real estate boom over?
Attendance at property auctions dwindling
In the past 2 to 3 months, auction clearance rates have been 50% range, which is low considering attending these auctions are somewhat of a national pastime. Much of it would also be attended by foreign investors though the rules for foreign home ownership is now much stricter than before.
The recent market-cooling may not yet be too much of a concern for a sector which has grown for the past 27 years without a downturn. But the weakness in the Australian housing market has caused some economists to sound alarm bells. As the real estate sector has fuelled much of Australia’s economic growth, they fear a recession or a financial crisis may be imminent.
Chinese government’s tighter restrictions on capital outflow
While governments may struggle to reconcile the desire for economic growth with the almost-unstoppable influx of influence by the Chinese, Mainland Chinese investors have played a large part in the real estate sector growth of many countries.
The Chinese government’s curbs on capital outflow have however stifled overseas real estate investments, not only in Australia but also in Canada. The other part of the slower flow of cash into the real estate market could also be the curbs such as raising taxes on foreign buyers implemented by the Australian government.
In Sydney, home prices are down 4.4% this June in a year-on-year comparison. Annual price-increments in Melbourne and Brisbane have also called to 1%, down from a double-digit growth last year.
This decline may, however, be good news for buyers who have cash, but just not enough of it to compete with speculative buyers.
These prospective buyers are mostly homeowners who have genuine housing needs, thus while the property sector may not boom as before, it may also not hit rock bottom that soon.
This content was originally published here.