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Recent Macroeconomic Factors that are going to support the Australian Housing Sector

Updated: Jan 13

While long term fundamentals of property investments are very much intact, COVID19 has recently sucked the confidence out of the market.


In the past, almost every doom has been followed by a good property price boom. For example, Australian property median was down by -5.1% in 2008, only to be followed by a growth of 18.1% and 11.9% in 2009 and 2010 respectively. Reason: the Government will do its job of resurrecting the markets by offering all sorts of grants and freebies.


Let's have a look at the recent macroeconomic factors that are going to support the Australian Housing sector very well.


Budget -> Consumer Confidence -> Relaxed Lending Criteria -> Low interest rates

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Recent Macroeconomic Factors

a) Federal Budget - new spending and tax measures

  • Extension to the First Home Loan Deposit Scheme

  • An additional $14 billion in new and accelerated infrastructure projects over the next four years.

b) Consumer Confidence surge

  • Consumers endorsed a popular Budget with 11.9% surge in the Westpac Consumer Sentiment Index.

  • The โ€˜time to buy a dwellingโ€™ index increased 10.6% to its highest level since September 2019.

c) Relaxed lending criteria

  • Making it easier to take out bigger mortgages.

  • Banks only need to apply a 2.5% serviceability buffer to determine whether customers can afford mortgage repayments (significantly below the 7% minimum interest rate test that APRA mandated 4.5 years ago). This would also cut โ€œred tapeโ€ and speed up the borrowing process.

d) Shift in the monetary policy

  • Monetary policy will now be calibrated based on where inflation has been rather than where it is going. Additionally, buying 10-year bonds will predominantly increase competition among the banks.

  • This implies that further easing is likely on the way, and there will be lower rates for much longer.

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Moreover, the ongoing success across the nation in containing the COVID-19 outbreak; and the expectation that the Reserve Bank Board is likely to further cut interest rates at its next meeting on November 3 are further supporting the markets.


A distinct lack of available stock also means the short term demand/supply equation is biased toward the likelihood of rising residential housing prices in the very near term.


Of course, one has to evaluate their personal circumstances and their long-term strategy before jumping into any buying decision. With high leverage and stakes, it has become more essential to follow the right.


If you are unsure where to start with your search, get in touch with Get RARE Properties. We are here to help you.


Next steps: Should you want to learn how the author built his $5mย balanced portfolioย in 7 years, and aspire to own something similar, feel free to get in touch via email atย rasti@getrare.com.auย or book an appointment here.


Disclaimer: This article isย generalย in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where applicable, seek professionalย adviceย from aย financial adviser.

Book Obligation Free Discovery Call! Talk to Vaibhav Rastogi, Buyer's Agent - Get RARE Properties, Sydney Australia

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