Real estate investment, at the moment, is in its golden age, according to an analyst with Credit Suisse.
He wrote on Twitter: The property market is as hot as ever.
The market has recovered from the global recession, and as the global economy has improved, so too has the appreciation of property.
This is a period of high demand, as property values are in the mid-20s per cent range in major developed markets.
And the boom is not limited to the U.S. or Europe.
Australia, for example, is now selling its last property for the highest price in more than two decades.
However, many are worried about a dip in property prices, particularly in Australia’s inner-west, where there are more than 2 million properties.
“This is one of the few times in a decade where prices have come down so quickly, and the property market has rebounded,” says Andrew Mitchell, chief economist at real estate company Zillow.
In his view, this is due to a lack of demand and a sharp fall in the price of land.
“Land prices have been very low for a number of years, and it’s a result of a combination of factors,” he said.
“For one thing, the global financial crisis and the fact that governments are spending more on housing are both having an impact.”
But, of course, the main reason for the price drop is because property prices are higher in developed markets.
“So how did we get here?”
This recession has been particularly brutal on the housing market, and that has meant a slowdown in land prices, so it’s been a real challenge for the sector,” Mitchell said.
The property market in Australia has recovered a lot from the Global Financial Crisis.
But Mitchell believes that this downturn will last for a long time.”
We see a lot of these low-interest rates and mortgages, which are very attractive, and they are getting more and more popular in Australia,” he says.”
So the question is what will happen with the housing boom that we have seen since the Global financial crisis?
“It’s a question that the government will have to answer and whether it’s sustainable.”
Australia is still the world’s most expensive property market, but it’s going to be tough for the housing industry to recover if the economy is in such a slowdown.
“The property sector is also struggling with inflation.
Mitchell says that in the next three to five years, house prices are likely to start to climb again, but the average price of a home is likely to remain in the $300,000s.
If you have property investment, there is a good chance that your investment will rise in value.
Mitchell points out that the Australian government has set up a housing finance company to manage its mortgage debt, so you may find it easier to get financing in the future.
But Mitchell also warns that the property boom will be tough to sustain for the foreseeable future.”
It will be difficult for property investors to make a sustained recovery as property prices recover from the Great Recession, and we have to expect that this boom will last much longer,” he adds.