Sydney is in the midst of a serious housing dilemma. Interest rates are skyrocketing, house prices are falling, and there is a severe shortage of housing, so rent prices are going through the roof. Experts are predicting that this unique conundrum will continue for the foreseeable future, making this a confusing time for both buyers and sellers alike.
Yet for a very astute cohort of individuals, this same set of circumstances represents the most opportune and best time yet to buy property!
In this article, we’re looking at what is causing this dilemma, and why investing in a home and land package in the summer of 2022 might be the best option for smart buyers. Let’s look at what is creating what some might call chaos and others might call opportunity.
Rising Rent Costs
Rent is increasing drastically around the country. Sydney and the surrounding suburbs have been no exception to this, with some renters finding their rates increasing by more than $100 per week. With interest rates on the rise, many landlords are passing on these additional costs to their renters, forcing them to cut back on food and other necessities to keep a roof over their heads. Everybody’s Home has been collecting data and has found that more than half of renters are experiencing financial hardships due to these increases. Australia is one of the world’s wealthiest countries, and yet people are still struggling to afford their rent payments. This is predicted to continue to be a problem for the foreseeable future.
As rent is increasing in Sydney and throughout the country, the number of homes available is decreasing rapidly. The number of rental homes in the city has decreased, from 21,000 last year to only 12,000 this year, and only 1.5% of those are actually available for rent at any given time, leaving landlords to command premium prices.
As Sydney’s population continues to rise, the lack of housing isn’t a problem that will be solved anytime soon. With 1.2 million additional residents expected by 2030, the demand for affordable housing will continue to increase. While traditionally this should make it a seller’s market, because of rising interest rates, it means borrowers or prospective buyers have less money to spend, which is leading to a decline in house prices. As house values fall, this leads to a ‘wait and see’ approach by this same set of prospective buyers. In this environment, a point of equilibrium is eventually reached whereby buyers decide to sit on the fence until the market bottoms out and sellers decide to stay put and hold their property until better selling conditions inevitably return.
Home Buyer Bargains
In the meantime, while all of this plays out, land developers still need to develop and sell their vacant land, and builders still need to build houses. This is where the real market opportunity lies in the summer of 2022.
A smart buyer, be they a first home buyer or investor, knows that entering the market with a home and land package in this environment means they will have virtually no competition and may grab themselves some very attractive bargains in sought-after suburbs. They may well bag themselves a dream home and block of land with a combined value which falls well below the price of an established house in the same area, thus creating a nice little chunk of equity right from the get-go. All of this before interest rates begin to stabilize and the flurry of new immigrants begins to fire up the market once again!
Ramped Up Immigration
Australia is full of booming businesses, but unfortunately, has run out of skilled workers for the jobs available. Because of this, businesses are turning to immigrants to help fill positions within their companies. Australian businesses will always hire locally when they have that option, but right now, the people just aren’t available.
With more than 480,000 job vacancies across the country and unemployment at a 50-year low, employers need workers to fill their shortages urgently. This is why the Australian Government has lifted its cap on permanent migration for the first time in a decade. Australia will now take in 195,000 new immigrants in this financial year, an increase of 35,000 from the previous cap. Each one of these 195,000 individuals will need a place to live.
Solution to the Housing Shortage
Build more houses! As simple as the solution sounds this is clearly what is needed over the long term, especially in Sydney. With the housing market being where it is, many are now turning to buy new homes and land to do just that.
House & land packages allow more people a chance to secure a precious piece of land and then build their dream home. There are several benefits to doing this, including paying less than you would pay for an established home and not having to pay stamp duty on the construction costs meaning you only pay stamp duty on the value of the land. This makes land packages and site costs an attractive option to both investors and first home buyers alike.
Engaging with a reputable and well-established builder can make your journey much easier. A good builder will work diligently to make the process easy for the purchaser and ensure their investment is well taken care of.
Building a new home represents an excellent investment. When a new house is built it creates value for the owner and for the wider community by adding new and much needed housing stock to the market.
There is no such thing as the perfect time to build a new house, but during the Summer of 2022 you might just find that there has never been a more opportune time to get yourself a great deal and position yourself comfortably ahead of the market!
Let Champion Homes Help You
When it comes to home and land packages in the Sydney area, Champion Homes is a fantastic choice. Our Freedom House and Land packages deliver you more home for less, providing you with a range of high-quality design choices for single storey, double storey, corner lot and narrow lot options, all of which come packed with more inclusions for fantastic value.
With our extensive experience in building houses & land throughout Sydney, you can rest easy knowing that we’ll deliver excellent designs & quality you can trust. Set up your free, no-obligation consultation with a dedicated house and land specialist today!