Investors who are still sitting on the fence, waiting for things to improve, may find themselves missing out on the current buying opportunities - amid signs that property prices in some areas are starting to move upwards.
CommSec chief economist Craig James said that while Australian house prices in the December quarter were down just over 3% compared to a year ago, that may end up being the worst of it - similar to the small annual falls witnessed in 1992 and 1996.
"In fact one indicator shows that budding homebuyers may need to be on guard for higher house prices, eroding some of the solid gains in housing affordability," said James.
In December, the average home loan across Australia jumped by 8.0% to $257,400 compared to a year - the fastest growth in 14 months and above the decade average of 7.7%.
"If the average home loan is increasing, it generally means a two or three things. Either home prices are rising or people are taking out bigger loans to buy bigger and better homes - or, possibly, the composition of loan demand is changing in favour of those purchasing more expensive properties," he added.
But with the job market softening, James said it would be unusual for people to be opting for 'bigger and better' homes. He also noted that the current market has a much higher proportion of first homebuyers, so it is to be assumed that they were in the market for smaller and cheaper properties than buyers of second and subsequent homes.
"So the likelihood is that home prices are starting to creep higher. In fact, prices may actually be gathering momentum in some states. Home loans in South Australia are almost 11% bigger than a year ago with the average one in Queensland up just over 10%. Housing analysts across the globe marvel at the resilience of Australian house prices, but at the end of the day, it is nothing more than simple 'supply and demand' dynamics at work," he said.
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