Bad news for private real estate for sale by owner sellers as the prices of real estate in Australia won’t be increasing in the near future, even if the RBA reduce interest rates over the coming months. Rather, residential property prices of real estate are set to fall in the coming 12 months as the real estate and property market embraces itself for a turbulent period. Below are some reasons why….

Properties are Overpriced – In most areas across Australia real estate and property prices are still tinkering not much below the high real estate prices of the boom time. Obviously a few places (like Western Sydney) have been hit hard but most areas have seen real estate prices reduce by a small amount, but nowhere near the prices they were before the boom. This is because many property owners are holding on to their houses in an effort to ride out this storm, resulting in real estate prices staying artificially high.

Resources Boom – The resources boom pumped up the Australian economy and in particular real estate and property prices for real estate across markets in WA, SA and QLD. This boom is slowly drying up and means less demand for real estate which will reduce property prices across the Australian market.

Developers No Access to Finance – The financial crisis means it is harder to obtain finance, in particular large developers wanting to undertake real estate development projects. In a subdued property market these types of real estate developments carry a large amount of risk which banks and financiers try to avoid.

Liquidity Crisis for Investors – Investors have been hit hard by the share market and hedge fund losses, meaning they have diminished funds available to invest in real estate in the property market. So less investors in the market purchasing real estate and investment properties will affect the prices of apartments and units across Australia.

Recession Looms / Job Uncertainty – There is uncertainty amongst people in the economy about where the economy is going. This uncertainty will scare property owner away from purchasing additional real estate (in particular investment house) and also deter first home owners who are thinking about purchasing a house.

You should maybe reconsider your strategy if you are anticipating real estate and property prices to rise over the next 12 months.