5 reasons the real estate sector is so strong

Property has been one of the standout performers of the Australian economy over recent years, with more people approaching mortgage brokers to get their foot on the ladder.

Even as the country has been through the global financial crisis and more recently the downturn in resources sector activity, property has held its own and continued to perform well. Here are just some of the reasons why the Australian dream of property ownership is still alive and well – and is likely to be so for a while longer yet.

1. Strong house price appreciation

Fitch Ratings acknowledged that house prices have appreciated considerably over recent months, which in turn has added strength to the national market. In fact, there has been a slowdown in delinquency rates, showing that Australians are making a financial commitment to their real estate.

2. Improvements in the economy

Australian homebuyers have also been making the most of an improved outlook for the national economy. CommBank has forecast that economic expansion will reach record highs in 2015-16, which is likely to have positive knock-on effects for consumer confidence.

CommSec Chief Economist Craig James indicated that low interest rates are one factor that has played a part in this, as several previously struggling sectors have been given a lifeline.

3. Supply keeps pace with demand

There has been some criticism that the supply of property hasn’t kept pace with the level of demand, but this may have evened out over recent months. Tim Lawless, CoreLogic RP Data head of research, indicated that an increased number of homes are being advertised, so it will be interesting to see whether a new trend is in fact emerging.

4. Construction activity is buoyant

The Australian construction sector has also thrived over recent years, which may give people the incentive they need to enter the market. The Housing Industry Association recently commented on official house building figures, which showed a growing interest in new dwellings among those with property investment loans.

As demand for homes increases, so does building activity. This has helped keep the real estate sector and economy as a whole moving in the right direction for some time.

5. Overseas investment changes have been introduced

There had been calls for changes to the way in which overseas investors find the finance they need to buy property – and these came into effect in December last year. This has opened up the market to a wider range of borrowers who may otherwise have felt they had been priced out.

The Property Council of Australia said the reform package had led to a positive knock-on effect for housing affordability throughout the nation.