Home buyers and investors looking to purchase a new or existing home need to understand how population growth within Australia’s cities and suburbs affects future property prices. When speaking with a mortgage broker in Cockburn, Kwinana, Rockingham, Perth, or the surrounding area, make sure you ask about recent or expected population growth rate. An area that suddenly becomes a hotspot for families and investors will usually see a surge in property values. This is an important consideration when taking out a home loan because if the supply is greater than the demand, there is no guarantee that there will be a great return on the initial investment.
How Property Supply and Demand Affects Financial Return
Australia has seen some population growth in the last year. While the overall average is still less than the growth rate of previous years, some states and cities saw significant growth. For example, Perth was the leader among the capital cities with a growth rate of 2.5%. The supply of available homes in the larger cities isn’t as abundant as homes along the coast and rural areas because more people flock to the cities due to the amenities and entertainment options. A population hotspot can continue to see growth for years, so home buyers wanting a decent return on their investment would be better off taking out a mortgage on a home in a growing area with limited supply.
If the supply of homes is too great in a particular area, homebuyers will notice an insurgence of people without a lot of growth in the property values. Since competition is weak, there is lack of rising property values as seen in places with growing populations but limited supply of homes. Since apartment rentals can allow for a population to grow greatly without the need to take out a mortgage or invest in property, moving to a hotspot with a large supply of homes will not allow for a large return on the initial investment.
Working with Mortgage Brokers in Perth
Since Perth is one of the current population hotspots, the mortgage broking industry is working with a number of homebuyers to approve mortgages and get people into their homes. Since competition is greater in larger cities, it’s important that buyers are able to get approval and secure a home loan quickly to avoid losing out on their dream home.
Homebuyers can also conduct preliminary research on the current housing industry and find out projected areas of growth through their mortgage broker. Perth is a popular area now, but a good brokerage firm should be able to look at industry data and help buyers determine which other states or cities are set up to see a population explosion within the next few years. No matter where a buyer chooses to live, supply and demand will always have an effect on a buyer’s financial return.