What Factors Influence the Real Estate Market?

Buying or selling a home? Investing in property? It’s impossible to ignore the powerful influence of politics on the real estate market. Government policies, economic decisions, and even global events can impact the industry, triggering events such as interest rate changes and housing affordability.

We’ll dissect how this changes can shape the decisions of buyers, sellers, and investors, and provide insights to help you navigate the market with confidence:

Government Policy

Government policies tend to dictate several significant decisions in the real estate world, particularly regarding changes in tax laws, economic stimulus investments, and interest rates. Shifts in political reign also typically arise alterations in funding across many industries like infrastructure and technology, which causes a trickling effect into the area of property development. More directly, political uncertainty and property inflation can also cause prompt monetary decisions from the Reserve Bank of Australia regarding interest rates and mortgage costs.

Inflation Challenges

Investing in real estate during times of inflation presents several challenges that you should be aware of. The cost of housing construction can also rise, with increased development costs due to the inflating prices of building materials and labour. This can lead to a slow-down in areas which have more development, typically, the outer suburbs of a capital city. Consequently, inflation typically leads to rises in rent prices, which may be a beneficial shift for sellers and owners, but a key consideration for potential tenants.

Local Developments

Adelaide benefits from its status as one of the more affordable cities in comparison to the other major territories, like Sydney or Brisbane.. South Australia is home to a diverse economy that encompasses many flourishing industries, such as the defence, health and education sectors, which empowers a market with stable housing demand. Because of this demand, as well as stronger rental yields and Adelaide’s proactive investment in infrastructure progression like the redevelopment of the Adelaide CBD, it helps offset the impact of inflation across the local real estate market.  Always consider the longevity of multiple industries as a healthy market requires a broad section of public and private sector investment and stability.

Tips for Navigating Uncertainty

While government shifts and the impact of inflation can be confusing, frustrating and unpredictable at times, there are several ways you can manoeuvre the precariousness.

• Look for specific areas – Consider suburbs located in close proximity to education, healthcare and public transport, as they are typically safer investment options.
• Think long-term – Prioritise predictability by investing in areas that may see minimal returns in the short-term, but are projected to have significant growth in the future.
• Diversify your portfolio – As the residential sector is often the most heavily impacted by government policies and funding, expanding your horizons into the commercial or industrial property markets may offer greater investment opportunities.
• Consult a professional – Discuss your options with a professional who can offer guidance on how to traverse the current economic and political climate. Turner Real Estate boasts a knowledgeable team that can figure out the best options for you.

By prioritising security, stability and predictability in your real estate decisions, you increase the likelihood of remaining focused and achieving success amongst erratic political changes.  Also, always keep in mind that property should be considered as a long-term investment strategy, and history would show that property offers a solid and stable growth path over extended periods of time.