Should we be concerned about the supposed ‘property bubble’?

November 14, 2017
November 14, 2017 Luke

Should we be concerned about the supposed ‘property bubble’?

The media seem hell-bent on using scare tactics when it comes to the ‘too good to be true’ housing prices. They like to sell the idea that, ‘any minute now’, the property bubble will burst, the economy will plummet and the sky will fall in.

The fact that none of the real world figures support an economic downturn, or indicate a drop in real estate demand doesn’t seem to phase the media’s insistent onslaught.

The myth of the bursting property bubble has been trotted out on current affair shows on and off, in the hope that, ‘eventually,’ it will come to fruition.

Yet the numbers never seem to swing in their grim-faced favour, not even momentarily, and 2018 looks to be no exception.

Melbourne’s population is on the increase

In September the Australian Bureau of Statistics (ABS) released information of the current Australian population situation and the results are very encouraging.

More than that, they tell us that Melbourne is booming.

The City of Melbourne’s population data shows the biggest surge in inhabitants in almost a decade.

The real confidence boost in the data is that the growth is rapid. This is the fastest rise in the city’s population since 2008, with the biggest influx of migrants since 2009.
More residence means more housing, more housing means an increase in demand, not a decline.

Overall Victoria’s population growth was up 2.43 percent, the states fastest annual growth since 1960.
The majority of the rise was contributed to overseas migration which allowed an additional 80,000 people to call Victoria home.

Is the property bubble going to burst?

This growth means not just a rise in demand for homeownership, it also means an increased demand on infrastructure, further boosting the stability of individual communities and the economy for Greater Melbourne.

The evidence is pointing towards a strengthened national economy over the next three to six months too. The Australian Bureau of Statistics reported that the March quarter alone showed a population increase of 126,000 people.

The growth is a great driver for Australia’s economic performance. This kind of population increase creates employment and sets the nation on a path of continued growth and development. Governments can feel confident in investing in ongoing infrastructure plans that include power, roads, water, airports and education systems.

High demand also creates an opportunity to explore new transport and energy systems that can increase efficiency and productivity.

With approximately 300,000 new Australians being born every year we can expect that economic and social infrastructure will remain in high demand. Pressure will stay high on property prices as supply struggles to keep up with demand.

Far from the bubble bursting, Australia continues to hold its position on demand and growth. While the majority of immigrants are heading to NSW, in particular Sydney, Melbourne is a close second, falling only 10,000 people short of the overall NSW migration population increase for the year. Overall all states and territories of Australia continue to increase population, showing support for a stronger economy and an increased demand for real estate and infrastructure.

Luke Assigal, Managing Director
Parley Property Advisory

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