Fear of Missing Out or FOMO is instigating home buyers to rush into the market and buy whatever they can get their hands on. The ridiculous demand has been growing constantly since last year, pushing housing prices up as the supply can’t keep up with the enormous demand.
After the figures from the Bureau of Statistics (ABS) were released in December 2020, experts speculated that housing prices would rise by an outstanding 8-12 per cent in 2021. But now that the new figures are out, it has been confirmed that the market prices have risen by a scary 19 per cent. In 2020, the housing market suffered a deep dive in prices. Thanks to the pandemic, buyers and sellers alike got stuck inside their houses, freezing the market nationwide. But, unlike other countries, Australia controlled the spread of Covid-19 with fast actions.
In order to stimulate the economy once again, the government decided to extend the HomeBuilder grant until the 31st of March 2021 which offers home owners/occupiers grants of $15,000 and $25,000 to either ‘substantially renovate’ their existing homes, build a new home or buy an off-the-plan new home. This is to ensure more properties are being put in the market, increasing supply in a desperate move to match demand. It is worth noting that Equnox Designs ambitiously advised our investors to purchase their properties when the market was on a record low. And now, as their value grows, so does our investor’s excitement.
The housing market in Sydney has always been one of the most resilient ones. Over the past 40 years, almost all properties have doubled in value, growing the market with it. Even in the face of uncertainty after Covid-19 hit, the ever growing housing market bubble only reduced slightly.
Along with the different grants and fundings the government offers, responsive lending laws have been watered down, destroying unnecessary barriers blocking credit flow to households and small businesses. Thanks to these changes, more people have an opportunity to get bigger loans with low interest rates, allowing them to purchase a house of their own, but it is exactly that accessibility that is creating feral competition in the market, shooting prices up to record high amounts. Sellers are able to sell for a higher price while buyers end up buying a new home. Arguably, a win-win situation. But what happens when people end up with bigger loans that they weren’t properly screened for and end up with debts they aren’t able to pay?