Australians’ Love for Property Pushed to New Heights
While the share market plummeted this week with over $80 billion wiped off its value on Tuesday, the largely stable Australian housing market surpassed $10 trillion in value for the first time in history according to the latest ABS data.
Meriton Founder and Managing Director Harry Triguboff says “This once again highlights the volatility of the share market compared to the security of housing. Australians have always loved property, and it’s for good reason. Not only is it a home to many, but also a very safe investment vehicle that has increased the wealth for millions of Australians.”
Over the past 2 years, housing prices nationally rose more than a quarter in what was the fastest boom in over 40 years. Investors are also returning to the property market, making up approximately one-third of the market, with lending to the group up 37% according to a recent article published in The Australian.
Increased construction costs will also be a key determinant as to how far values will rise.
“It’s now common knowledge that construction costs have risen quite a lot and will continue to increase. This is terrible news for the supply of new housing because many developers cannot build unless they can achieve a much higher sales price to cover higher costs. One of two situations is likely to play out; Firstly, if the market accepts the higher price, then values are automatically reset higher, alternatively, if the market doesn’t accept higher prices, then developers can’t build and supply will fall which will further exacerbate the demand/supply anomaly putting further upward pressure on rents”
Meriton’s very own Build for Rent and property management portfolio, which accounts for 9000 apartments, has seen rents increase up to 20% in just 12 months with a vacancy rate hovering below 1.4%.
“In an environment where interest rates are rising, sales have also shown to be resilient and remain consistent across the 14 developments Meriton currently has on the market. We have just sold out our 5th development this year and we are working towards releasing another by next week – Trilogy in Macquarie Park.”