The Australian housing market went into freefall from 2018 to early 2019. Not only did they fall, they fell at an increasing rate for a whole year. This was possible due to the restrictions on lending in the real estate market. The rise in the inter-bank Bank Bill Swap Rate put pressure on the big four banks to follow small lender in increasing mortgage rates. As you can imagine, the mix of booming house prices with a sudden increase in repayments can cause a huge systemic crash.
The result of this, mixed with a natural bounce-back after a crash, has meant the property market is booming again. Of course though, you can’t help but think the bigger the boom, the bigger the crash. We’re now in a situation where property prices are rising, and many want a piece of the action, but it’s a little too soon to get carried away. Rising prices are great, but volatility is not. It may be best to wait a little longer for the dust to settle. However, those who do not need mortgages may feel like now is a good time to benefit from the rising prices, without having to worry about the inevitable future interest rate increase.
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