Newspaper article The Daily Mercury (Mackay, Australia)

Property Savvy Study Economic Influences

Newspaper article The Daily Mercury (Mackay, Australia)

Property Savvy Study Economic Influences

Article excerpt

WHILE it's true that getting the best return from your property purchase is all about timing, there is no magic crystal ball that can tell what path property prices are likely to take. If investors and home buyers understand the factors that determine residential property prices, it puts them in a better position to capitalise on opportunities that may not be obvious to the majority of the market.

If you can get into the market before prices start to go up and get out before they come down, you maximise your profits and minimise (or hopefully eliminate) your losses.

The forces that influence the prices of our houses are the same that influence the prices of cars, TVs and groceries a demand and supply.

The price of an item is dependent on the demand for that item and how much of it is for sale. For example, imagine two types of property; a seafront house in the Northern Beaches and a small unit in the Mackay CBD. Demand for property on the seafront is high but there is only a limited supply of properties with absolute sea frontage. High demand, low supply, the price goes up.

On the other hand, demand for apartments is not as high as demand for houses on the seafront. In addition to this, there is a large supply of flats, units and apartments in the city. Low demand for apartments, high supply, the price goes down. The price of apartments will start to go up when demand increases and/or supply dries up as no more apartments are being built.

Demand: It is owner-occupiers and investors of property that provide the demand for property. Understanding what influences their buying behaviour can give you an insight into when property prices will increase and decrease.

Some of the major factors that influence demand are interest rates, economy, demographics, government, finance, rents and returns on alternative investments, prospects of capital growth. …

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