The inner workings of the global property market boil down to a few major players holding some of the most sought-after real estate in the world - amongst them, Australia, the United States, and the United Kingdom. There are a mixed bag of forces at play within each of these markets, spanning everything from political influence to housing crises, but regardless of location, understanding the flow of cash and opportunity in the property sphere could prove invaluable to anyone looking to buy, sell, or even just find a more affordable place to live. In a time when salaries can’t keep up with house prices, first-home buyers need every advantage they can get.
Property prices in Australia have been historically driven by the demand resulting from population growth and employment opportunities, which may explain the sky-high price tags attached to many Sydney and Melbourne homes, but the tides have begun to turn - buyers are shying away from Sydney’s million-dollar homes in favor of more affordable options. As the market currently stands, the city’s year-on-year growth rate has shrunk by 5.9%, while the lower median property price in Hobart has resulted in a growth rate of 8.4%.
In some good news, the treacherous rise of property prices has stagnated in many capital cities, although many homes are still out of reach for new entrants to the market. Home buyers in Sydney and Melbourne are facing the country’s most challenging summits, with median prices sitting at $840,000 and $665,000 respectively. A recent report by Lendi revealed, these two major capitals also saw the greatest decrease in property values between November 2018 and January 2019, but this is unlikely to mean much to first home buyers or low-income earners. The vast majority will find better luck in the smaller capitals - Hobart, Adelaide, or Darwin. Unfortunately, the same isn’t necessarily true for renters, as property owners enjoy high rental yields across the board, with Brisbane, Adelaide, Hobart, Canberra and Darwin all hovering over the 5% mark. In short, it’s the high cost of living on rented time which makes home-ownership look like such an attractive option - at least for those who can afford it.
The United States
Although many residents may not realize, the property market in the United States is, in many ways, inextricably linked to political affairs. Decisions made by the US government impact crucial factors like rates for homeowners, employment, and the cost of borrowing money. As a result, consumer confidence, demographics, and the economy at large can be dramatically affected. There are many power players in and amongst the government, and even the appointment of a new Federal Reserve chairperson can have a domino effect, either building or reducing confidence amongst residents, and the economy at large.
Despite the forecast of stagnating house prices, many homeowners are likely to consider selling up and moving on, a motion which could reflect the desire to live in a safer, wealthier, or more popular neighborhood. While more properties on the market might sound like good news for young people and first-home buyers, the reality is that many of these homes will likely fall outside of their feasible price range.
Even so, millennials have been named the generation most likely to drive property sales in their bid to escape the rental cycle, even as sales decline across the board. Now is hardly an easy time to buy, either, as mortgage interest rates are still on a long-haul upwards trajectory, a trend with influence far beyond the US border. Given the importance of the US dollar amongst the global economy, rising rates will likely affect many other nations across the globe. For renters, escaping the clutches of their bonds may be a distant aspiration, particularly with national rent costs set to rise, but some good news comes in the form of a national rental property surge. An increase in available rental properties could be a helping hand for those looking to enter a previously crowded market, particularly young people and immigrants.
The UK property market is facing similar challenges to the biggest pain points in Australia and across the United States, namely a lack of suitable housing for residents on a low income, as well as a distinct lack of social housing for those in need. Similar to the situation in many parts of Australia, the lack of affordable housing in the UK has been labeled as a crisis, leaving many stranded in the property market or struggling to find a suitable rental property.
The nation’s Housing Secretary, James Brokenshire, says the solution is simply to build more houses, but there are a multitude of other pressing issues on the horizon for residents, beginning with Brexit.
The looming decision will have a significant impact on many facets of life in the United Kingdom, and the property market is no exception. Many UK residents are feeling concerned about the state of political instability throughout their nation, and around the world, particularly as the decision date, March 29, looms only weeks away. There’s plenty riding on the outcome, with economists gloomily predicting disaster in the event of a no-deal result. This would send the British Pound crashing, leaving many local residents in the lurch, and providing foreign investors with a sterling opportunity to cash in. It’s difficult to predict where Britain’s residents may land in the aftermath of the government’s decision, but if anything is certain, it’s that Brexit has severely damaged consumer confidence in an economical and political sense.
In order to contend with a lack of purchase options, nervous homeowners and high costs, young house hunters should be prepared for a potentially tumultuous property market experience. Saving enough to buy a home in any major market is a challenge, but comfort exists in the knowledge that some millennials have taken on that challenge and won. Indeed, with some careful planning, scrupulous saving, and resilience, a more permanent position in the market is still a possibility for many.