Insight to the Real Estate Market
Australia has experienced periods of inflation throughout its history, and the property market has not been immune to its effects. Inflation can have a significant impact on the property market, with both positive and negative consequences. In this blog post, we will explore how inflation has affected the property market in Australia through history.
What is inflation and how can it effect the Property Market in Australia?
Inflation is defined as a sustained increase in the general price level of goods and services in an economy over a period of time. When inflation occurs, the purchasing power of money decreases, and the cost of living increases. Inflation can have a significant impact on the property market, with both positive and negative consequences.
During periods of high inflation, the cost of building materials and labor increases, which can lead to higher construction costs. This, in turn, can lead to higher property prices as developers pass on these costs to buyers. On the other hand, inflation can also lead to higher interest rates, which can make it more difficult for buyers to afford a mortgage, leading to a decrease in property prices.
Inflation and the Property Market in the 1970s and 1980s
The 1970s and 1980s were a period of high inflation in Australia. During this time, property prices rose significantly, as demand for housing increased due to population growth and low interest rates. However, this period also saw high levels of unemployment and rising interest rates, which had a negative impact on the property market.
The 1990s and 2000s
In the 1990s and 2000s, inflation in Australia was relatively low. This period saw a significant increase in property prices, fueled by low interest rates and increasing demand for housing. This led to a property boom, with many Australians investing in property as a means of securing their financial future.
However, this period also saw a significant increase in household debt, as many Australians took out large mortgages to buy property. This led to concerns about the stability of the property market, with many experts warning that a property bubble was forming.
Inflation and the Property Market Today
Today, inflation in Australia is increasing, the current cash rate is sitting at 3.60% with leading economists debating on whether or not it is going to increase or not. I believe the worst is over for the rate hikes and we may see a pivot from a buyers to a sellers market by the end of 2023
We recommend when looking to purchase in the Sydney property market currently, Make sure you do your own research on Market trends and macroeconomics or consult the experts at Kathryn hall real-estate and we can do the homework for you.
- Jakob Keane – Buyers Agent
