My House Value Information

When we talk about the increase in house values we can easily see that there has been a significant increase in house values over the last 20 years.

If you consider the average property value across Australia in 2009 is being quoted at around the $450,000 mark and you look back over time you will see that compared to about 1990 in Australia the average property sale price was around $160,000.

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This is great if you are a property owner you may have doubled even possibly trebled your networth as a result of this increase in house values.

Is there a downside to increase in house values ?

To consider if there is any downside to a constant increase in house values we also need to consider it is not just property owners who are effected by increases in house values, it does effect nearly every one as these increases in house values will also effect what people who are renting pay.

For example as prices go up the next investor for this particular suburb will have to pay more to get into the market, this will result in the investor taking out a bigger mortgage and this will result in ultimately the tenants paying more money in rent.

Another potential downside is with this continual increase in house values is it becomes harder and harder for 1st time purchasers to enter the market place.

And a clear example of how this can create a market that is out of balance is the Australian Federal Governments recent intervention in the market place by introducing the first home buyers scheme.

While clearly a good thing for the people who received it this scheme did demonstrate how our typical free of intervention housing market has not grown to a point that it is clearly distorted.

When a Government is giving citizens up to $21,000 to essentially buy a product it is a fair sign that something is not quite right.

I can not imagine any other market place where the Government would get away with such a scheme, and this clearly is just a result of the increase in house values being at such distorted levels that the Government has to step in a give people money and lots of it so they can afford to by a house.

Don't forget house values can go down

Although it has been a while since we have seen a dramatic fall in house values in Australia, it could happen.

Property prices in mid 2009 have fallen in many countries around the world.

An Example of this is in the USA from the house value highs of around January 2007 it is estimated house values fell by approximately 27% to January 2009 this returned property or house values to where they were at around January 2003.

This information is not to scare real estate consumers but to show that house values can go up and down, despite what politicians or real estate agents or property marketers may say.

Property marketers and real estate agents and mortgage brokers have a vested interest in seeing house values continue to rise but as stated above there are some downsides to a never ending cycle of rising house values.

Common sense is your number one tool when considering any purchase and when it is a purchase a big as a house purchase it is doubly important that you use common sense and understand we have been through enormous growth in the increase in house values it now be a time of consolidation in price increases.

Make sure you do all your research as any house purchase is generally a long term committment.