When you’re in the market to buy property, supply and demand are two of the most important terms to grasp a thorough understanding of.
Recently, there has been discussion among experts that residential construction is at its pinnacle and is on the way down.
This kind of talk is something property buyers should be looking into. Obtaining a firsthand insight to what’s happening amidst construction booms around the country will let you know where and when markets will be affected, and whether or not you should be worried.
So, is the construction boom over?
Over the last five or six years, the Australian construction market has been unbelievably prolific. Since 2011, the market has increased at a steady pace, however things are just beginning to slow down. Home values across most markets have seen significant rises during this time but the most surprising performances have come from apartment-related figures.
In terms of monthly approval numbers, apartments had taken over housing construction proposals in recent years. Then there’s the bad news.
Apartment approvals have slid downhill by almost 42 per cent as of last October, normalising levels of construction again.
Whilst the numbers are still currently higher than average, consistency in decreasing approvals suggest a substantial downhill trend in the near future.
But it’s not all doom and gloom. Some of our cities including Sydney, Brisbane and Melbourne are taking this trend right on board, projecting a glass-half-full result. An oversupply of apartments in these capital cities raises tremendous concern in their respective markets.
Put simply, its rather a blessing not a curse, however other markets could likely see opposite turnouts.
How could this affect me?
If the guru’s projections are true and the construction peak has really come to a screeching halt, buyers in 2017 could suffer. Less properties coming onto the market means apartment prices in certain markets could increase dramatically. Although the housing market remains stable, apartment construction is on the downturn and will start to affect buyer confidence.
With all that being said, the renovation market is on its way up. The results from this over the next few years could be interesting as well. As more people renovate their existing homes, buyers can view and inspect more modernised properties rather than purchasing brand new.
This will mean fewer houses, especially new, will be available to buyers however the already-established listings will be fresh and up to date with their respective location trends.
Although the experts aren’t always 100% correct on their projections, they generally are pretty close. If Craig Lowndes told you your cars’ oil needed changing, you’d probably book it in for a service, right?
Overall, keep yourself well informed on market trends and you’ll soon see the advantages of being up to date!