Analysts generally give all the reasons why Australian house prices will fall, but few tell you how property can go higher.
Here’s a few ways…
Tax cuts are one. Any across the board tax cuts for business, means business can afford to pay more in rent for office or industrial space. Likewise, tax cuts for wage earners means they can afford to pay a little more for houses.
Infrastructure is another. Any increase in infrastructure spending will cause higher property prices where it goes in. Say a new freeway cuts a two hour journey into 30 minutes, that must do something for property values.
When new infrastructure is built like this, the value of the surrounding land simply increases. A new train station for example obviously makes nearby houses more desirable and increases their sale value.
How else can Australian house prices increase?
Better public transport connections all send property prices higher. Money spent on roads and rail lines can only do one thing and that is bring higher property values. As an investor you need to watch government infrastructure plans, because the government is telling investors where to buy for price growth.
Then there’s population growth, and increases in immigration which are hugely beneficial for property prices.
Investment from overseas, particularly from Chinese seeking a secure property rights system like ours, are another factor to keep property prices high.
Loosening in lending standards can lead to higher property prices. If people are able to borrow more, that will feed into higher house prices.
And jobs growth is one of the key indicators you can look at to gauge the future direction for property values. Look closely at unemployment levels, while unemployment remains steady it’s most unlikely there can be any major fall in property prices.
If the economy is growing that will all feed into property prices. So now you know, there are factors at play in the economy that can keep house prices high as the real estate cycle progresses.