Are Sydney and Melbourne Property Markets Going Bust, or Not?

The best way to deal with Australia’s capital city housing markets is to maintain perspective.

For example, property values in Sydney could decline by about $22,400 in 2019, a 2% drop, based on the latest report from BIS Oxford Economics.

However, that is less than 50% of the $54,675 Sydney’s house price median increased to merely three months from September to December 2016.

On the other hand, prices in Melbourne shouldn’t experience significant drops over the next three years, based on the same report, which forecasts an increase of around 1% per annual through 2021.

The fact is, when viewed on a broader sense, the projected correction equals to a minor issue for most homeowners.

UK-based BIS Oxford Economics is just the latest economic organization to explain the Australian property correction. It joins Macquarie, UBS, AMP, Capital Economics, ANZ, and more.

According to its latest report, Sydney’s median is expected to bottom out 8% less than the 2017 peak of $1.2 million and stand at 4% below it by June 2021. However, the figure will still account for a 3% rise from present levels.

This projection for fairly moderate house price decline follows a surge in Sydney’s median house prices from $560,933 to $1.2 million in less than 10 years, and Melbourne’s from $460,800 to $913,162. This represents a 113.3% and 98.5% increase, respectively.

The drop of 2% forecasted for Sydney by BIS Oxford Economics would be recovered, and a little more, by 2021.

If you have a property in Newcastle and interested in knowing how your suburb is currently performing, we are offering you our time to provide a report.  Call us on 0418447856 to find out how and when we can assist you.

 

Australia’s Six Property Investment Hot Spots

 

 

It seems impossible to predict, but identifying the location that will heat up next is not as hard as some people may think.

I am sure you’ve heard stories of people fortunate enough to have purchased a home at the right time at a right price and sell it for a good profit.

We wonder why we weren’t able to secure the same good fortune for ourselves. But I believe, luck is rarely the factor in making a profit from investing in property.

So, is there an effective way to identify the next so-called hot spots?  The answer is yes!!

It’s essential to look for these important factors for future growth for houses (not units):-  low vacancy rates, future housing supply, owner occupancy data, low days on market and any foreseeable infrastructure developments like expansion of shopping centres, new hospitals, new schools and even leisure parks or bike trails.

In Sydney, property specialists report that Cranebrook in Western Sydney is the next hot spot while in Newcastle it’s Kotara.

Houses in Western Sydney are regarded as sound investments due to growing infrastructure in the area including university and hospital modernisation, and the $5 billion Badgerys Creek Airport. It also has great owner occupier figures and limited housing stock.

Hotspot: Cranebrook

  • Median house price: $638,000
  • 5-year capital growth: 67.8 per cent
  • Vacancy rate: 1.6 per cent
  • Average days on market: 23

 

While here in Newcastle, our market is worth watching thanks to a rising population, an expanding jobs market, low vacancy rates and cheaper entry prices than Sydney.

Hotspot: Kotara

  • Median house price: $620,000
  • 5-year capital growth: 70.4 per cent
  • Vacancy rate: 1.6 per cent
  • Average days on market: 24

 

Two other suburbs in Newcastle worth investing in are Cardiff and Warners Bay which have experienced similar figures to those of Kotara.

Want to know more about these suburbs or your own?  Call Annette to discuss on 0418447856.

 

 

The Right Time to Sell your Home

Housing prices were down again, declining 0.5% in September 2018 and 1.6% for the quarter, according to the CoreLogic Hedonic Home Value Index.

The Report continues, home prices have dropped by 2.7% since the national index peaked a year ago. Hardly a collapse, and a slower pace of decline compared with the past housing market decline (June 2010 to Feb 2012) when national housing prices dropped by 3% over the first 12 months, dropping 6.5% from peak to through.

Regardless of the market slowdown, sellers still can take advantage of many opportunities that would allow them to get the best possible price for their property.

 

When is the right time to sell?

Several factors can help you determine the right time to sell your home.

Number one is research.  Potential sellers should study similar properties to theirs that have been sold recently.  This will help figure out the price for the property and you’ll become familiar with the demand for housing in the area.

Demand from buyers in the market remains strong, and a declining supply means sellers have the chance to get top dollar for their property.

At present, for sale properties are down 10% compared to the previous year and properties being sold are down 25%. Also, it’s taking longer for properties to sell, giving buyers more time to make the right decision and sellers more time to get the sale price that is acceptable to them.

 

Is there a certain time to sell?

Traditionally, the best season to sell is spring, with plenty of homes coming onto the market during the warmer weather when the gardens are blooming and everything smells great.  However, seasonality is just one aspect that influences the sale of property.  Sellers also need to look at the supply and demand aspect.

 

Here is a good guide on when to sell:

Buyers consider natural light important. If your home is located where there is abundance of sunlight all-year round, then sell during winter when competition on the market is less intense.

If your property gets a little bit of sunlight during winter but more light during summer, then don’t give in just yet and wait for the right time. If your home is fronting west and has insufficient insulation or without air-conditioning or fans, then the best time to sell is during autumn or spring.

 

Do your homework

Real estate experts advise to go for it if a good opportunity presents itself, whether the market is up or down.  To help you sell for top dollar, find an agent who is very familiar with the market in your area.  Agents will appraise the price potential of your property by studying a variety of factors including location, amenities, condition, other conveniences such as parking and outdoor spaces, and recent sales of comparable homes in the suburb.

Experts recommend getting three different agents for a valuation. Agents continuously observe the market and study similar properties.  Call Annette Pinkerton today for yuor free market opinion and appraisal on 0418447856.

 

 

The 2019 Forecast for Australia’s Property Market

 

Financial Services Royal Commission final report & how will it effect the property market this year?

The final report is set to be released early in the year. Though the main spotlight was on home loans, at this point, there a good chance no more restrictions will be imposed on access to finance.

Banks started self-regulating their home loan program when the Royal Commission was launched in December 2017. Because of this, it got harder for people to take out a loan to purchase property.

The full impact of this will be known this month.

 

The Federal election

More likely than not, Australia will have a Labor Federal Government by mid-2019.

A more stable political environment is welcome news for the property markets, but the possible modification to negative gearing and capital gains tax concessions identified as a major policy are not so much.

If the modifications are implemented, chances are there will be more blows to home values and issues will surface for rental supply.

Whatever happens, the possibility of modifications has already alarmed investors, with home loans to this group dropping 30% from the peak.

 

Despite a credit crunch not happening, sentiment will be muted

There is plenty of speculation that people on interest only loans and highly leveraged borrowers will be facing problems. However, there are no statistics yet to substantiate this claim.  There is no credit crunch, but a far more muted forecast is seen for housing.

Due to so much uncertainty, especially involving the Royal Commission and the effect of a change in government, many buyers are not moving, just waiting for the situation to ease and this is reflected at our open homes where we are seeing fewer people.

 

Interest rates on hold

GDP growth slowed down in September, leading to a few commentators to conjecture that interest rates may be reduced in 2019.

However, it seems like the next movement is probably up – though the actual timing remains unclear. The country’s economic growth isn’t constantly robust enough to begin boosting rates.

Price drops in Sydney and Melbourne are forecast to continue.  The situation is Sydney is very challenging and, though it is a little better in Melbourne, the slow start to the year is expected to continue for both cities.

The problem is the uncertainty in the market, ‘til the Royal Commission is settled and the Federal election is concluded, the weak situation will continue.

 

Hobart and Adelaide will lead

It will be a slow market in the first six months of 2019, but Hobart and Adelaide will be top performers.

Hobart is expected to slow in 2019 but will remain bullish. The heady highs seen in Melbourne and Sydney over the last five years didn’t happen in Adelaide, but this is an advantage for the city.

Paired with expanding job opportunities, the City of Churches is our reported to be the next property hot spot.

 

To find out what areas in Newcastle are likely to be the next hot spots, call Annette directly on 0418447856 for her opinion.