3 Reasons we aren’t in a housing bubble

Home values in Canberra appreciated 10.6% over 2020 and analysts predict another 5% this year.

This is one reason some are concerned that there will be another housing bubble like we experienced a decade ago.

Here is what makes this market different compared to last time:

1️⃣ This time, housing supply is extremely limited. The price of any market item is determined by the supply and demand. If supply is high and demand is low, prices typically decrease. If supply is low and demand is high, prices naturally increase.

2️⃣ This time, housing demand is real! In this current market, demand is real not fabricated compared to the housing boom of the mid-2000’s.  Millennials, are the largest generation in the country and have come of age to marry and have children, which are 2 major drivers for homeownership.

3️⃣ This time, houses have plenty of equity! Homeowners can leverage the equity of their homes.  Even if there were to be a drop in prices, homeowners have enough equity to be able to weather a dip in home values and aren’t over-extended as they have been in the past.  This means owners will hang onto their homes rather than be forced to sell.

The bottom line is, if you are thinking of buying, don’t wait around expecting prices to soften any time soon.

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