Prices are up, rates are down.But is that all?
The Economist recently asserted that Australia is one of the World’s most over-valued property markets. That said, The Economist did conclude that Australia was not as over-valued as previously!
Short term, much of the rise in dwelling prices appears to be driven by the recent reductions in interest rates. In addition, commentators have argued, that cities such as Sydney have been overdue a growth phase – something which appears to be happening now.
But, over the long term – what is the prediction for property values?
The flight to the centres of cities has been documented over the past couple of decades. But, what we are only becoming aware of is that there is a battle between the generations for downtown properties in, say, Richmond, Ultimo, or New Farm. Where once these areas were the domain of young professionals, now these first home owners are often competing with Empty Nesters. Neither Gen X or Gen Y wants to live in the suburbs and both are competing for the same unit – with the obvious price consequence.
Banks once lent to Gen Xers as they looked to buy their family home in the suburbs with a yard. Now, banks must meet the needs of Gen Y too. Nowhere is this clearer than in recruitment, where there is a shortage of mortgage brokers.
Borrowers are expecting new things from lenders. It could be e-conveyancing where settlement does not have to take seven weeks. It could be new products such as Self Managed Super Funds. It could be a mobile app with digital signatures that allow purchasers to sign a loan on the go.
But, as you will see in this edition, mortgage broking is undergoing rapid change. The Reserve Bank argues that the housing market over the next years will be very different to the market of the last 20 years.