The real estate property market is a hub for investors across the globe and makes up almost $10 trillion of Australia’s wealth.
Capitalising on your investment depends on how much you know about the real estate market. You can benefit from educating yourself and staying up-to-date with the latest market trends. New investors looking to buy their first property have plenty to learn.
The real estate sector is vast. It includes residential, commercial, industrial, agricultural, and vacant land. Independent valuers in Melbourne are exceptionally skilled in the valuation of the aforementioned types of buildings. Plant and machinery also fall under the property bracket. This is why some of the leading valuation companies include it in their valuation services.
Now that we know what the different types of property are and their contribution to economic growth, let’s explore some more about the real estate market.
What do I need to know about real estate?
Location is key. It drives real estate value, but it is often overlooked. So what makes the location so important?
The right property is chosen based on convenience. This is important, regardless of the type you are interested in. Homeowners prefer easy access to transport, employment, schools and recreation. Travelling long distances to work, school or grocery shopping will bring on additional transport and vehicle maintenance costs.
Commercial and retail estate owners favour high foot traffic and popular destinations in a central business district. When there are banks, transport and other essential services within reach, it will make the operation of commercial property more profitable.
How long will the real estate property market be profitable?
There will always be a need for housing and commerce. Although the price of houses decreases from time to time, the average working-class citizen still can’t afford to buy property. This is why the demand for rental housing is high.
This creates an opportunity for those who own vacant apartments and houses. If you’re looking to invest in real estate, there’s also a chance to maximise your return on investment.
Renting out a vacant room in your house or a granny flat on can be a good source of extra income too. It can also contribute to your monthly mortgage repayment and continue to be profitable after it is paid in full.
Is the real estate market going to crash?
Real estate financial experts are positive that the property market is not going to crash. While prices are declining, it is still highly profitable. It will take much more than declining house prices and a weakening dollar to crash the market.
A dip in prices is also normal with a real estate housing “bubble”. This happens when there is increased enthusiasm for property and a hike in its price, followed by a decline in demand and thus, prices too.
The relationship between the economy and the housing market
Economic conditions drive the property market and vice versa. The economic factors that affect affordability include:
- Inflation
- Interest rates
- Job insecurity
- The depreciating Aussie dollar
These are all directly linked to each other. When the Australian Dollar depreciates against other foreign currencies, interest rates and inflation increase. Job security and the affordability of basic goods and services will then decrease.
How does this affect the property market?
Interest rates affect consumers’ confidence in taking out a mortgage. Since the cost of living is already high, a higher interest rate accompanied by the other hidden costs of buying a house will turn buyers away from buying and opt for renting instead. While interest-only loans do exist and can be helpful, they will work out more expensive once you have to start paying back the principal loan amount.
Homes are usually bought on credit. When one’s debt-to-income ratio is more in debt and less in income, it can be bad for one's credit score. High credit scores are more likely to result in a successful mortgage or loan application.
Can I buy a house with a low credit score?
You can buy a house with a low credit score, but if it is so bad that you’ve been blacklisted, the chances are slim to none. Improving your credit score before applying for a loan or mortgage will increase your chances of securing finance.
The importance of property market valuation
Valuation plays an important role in the property market. Without it, the true market value of real estate would be open to question.
The real estate market contributes greatly to economic growth and development. The valuation process helps level the playing field for buyers and sellers. This prevents overcharging or underpricing. Here’s how:
Property owners will know the current market value of their assets and use it to set a reasonable price: not too high and not at a discounted rate. Completed valuations also add to the market data pool. The information provided by a comprehensive assessment can be used later for future reference to when valuers use the comparable method of valuation.
Certified Practicing Valuers have tertiary qualifications in the field of real estate. Apart from their extensive knowledge, they are also trained and certified by the Australian Property Institute and the Royal Institute of Chartered Surveyors.
Summary
Australia’s real estate market is highly profitable. Great investment opportunities are always up for grabs.
After size and structural integrity, the most important factor to consider when buying property is location. A bad location can devalue a good house, apartment or commercial property. Others include nearby amenities and further conveniences.
Financial analysts are confident that the property market won’t crash. Although the economic climate does affect it, many more factors need to come into play for it to collapse completely.
Valuation forms a crucial part of understanding the value of real estate. Certified Practicing Valuers (CPVs) have the knowledge and skill to do an assessment of all types of property. Because they are registered with the RICS and its local counterpart, the API, they can also prepare a report for your property for a number of reasons.
Be sure to contact our team of CPVs before buying or selling property. Their expert opinion will give you insight into the property market and help you make smarter investment choices.
