The property market defied predictions of a slowdown at the start of the year, how long will the good results continue?
THE property market was supposed to slow down at the start of this year, but it’s defied predictions. Here’s what’s in store for the year ahead... and beyond.
THE property market defied experts predictions of a slowdown at the start of the year, but how long will the good results continue?
Figures released by CoreLogic RP Data this week revealed nationally values were up 9.8 per cent for the financial year, close to the previous year’s 10.1 per cent growth.
While it can be hard when gazing into a crystal ball to predict what will happen in the market, we’ve checked how close the experts came with their predictions last year and asked what them future holds for the market.
Cameron Kusher of CoreLogic RP Data said they had thought the market would have started to slow by now.
“It is definitely stronger than we would have expected it to be, particularly in Sydney and Melbourne, we thought those markets would slow more so than they have,’’ he said.
SYDNEY
BIS Shrapnel prediction: 8 per cent growth.
Reality: 16.2 per cent
BIS Shrapnel senior manager residential property, Angie Zigomanis, thought Sydney would have shown some resistance to higher prices by now.
“We thought people would start having second thoughts as to what they would pay, but that hasn’t been the case,’’ he said.
He predicted Sydney’s median house price would be 2 per cent higher in the three years to June 2018.
Mr Kusher said investors didn’t think they had any other viable options of where to park their money so they were bought property and that had continued to drive the market.
“Off shore buyers are seeing exchange rates benefits, housing is actually looking cheaper in Sydney and Melbourne than it was 12 months ago to them as well.’’
Terry Ryder of Hotspotting believed Sydney was close to the end of its cycle.
“Price figures are still showing Sydney booming but we know from the sales volumes figures Sydney’s slowdown has started already but it hasn’t been reflected yet in the price figures. That will start to show up later in the year.’’
MELBOURNE
BIS Shrapnel prediction: 6 per cent.
Reality: 10.2 per cent
Mr Zigomanis said Melbourne had attracted some of young buyers who would normally have moved to Queensland for the sunshine and lifestyle. He said generation Yers did not equate lifestyle with sunshine anymore and were more interested in “hip and trendy bars’’.
“It is probably why you are seeing Melbourne doing so well now,’’ he said.
Terry Ryder had expected Melbourne price growth would keep in fairly close pace with Sydney over the past year.
“The more distant affordable areas are the ones likely to see more growth in the next 12 months,’’ he said.
Mr Kusher said it was likely to continue to be a standout for capital growth however the rate of growth would slow.
BIS Shrapnel predicts median house price growth in Melbourne of four per cent in the three years to June 2018.
BRISBANE
BIS Shrapnel prediction: 7 per cent
Reality: 3.4 per cent
Mr Kusher said this time last year they predicted Brisbane would be a little bit stronger but that had not come to fruition.
“It still looks like at some point the Brisbane market will probably pick up, certainly not to the same magnitude as Sydney and Melbourne, but still looks a way, away and I don’t think that will happen until Sydney and Melbourne start to slow.’’
Mr Zigomanis said things were still economically a bit tough in Brisbane which had dampened property price growth.
“Queensland is sort of suffering from the down turn in resources expenditure. Mining towns have been hit the hardest but ultimately a lot of administration and other jobs are still based in Brisbane.’’
BIS Shrapnel predicted 13 per cent growth in Brisbane by June 2018.
Terry Ryder said the general growth figure for Brisbane was not very high but some individual suburbs had done well including suburbs on the northside that he predicted would grow in value.
“We are talking Chermside, Kedron Nundah, Nudgee, those sort of places. Most of those areas have had double digit growth, some have been as much as 15 per cent.’’
DARWIN
BIS Shrapnel prediction: -2 per cent
Reality: -2.9 per cent.
BIS Shrapnel was pretty close picking the drop in Darwin’s median prices. Mr Zigomanis said the market had moved into oversupply and this was reflected in high vacancy rates.
“Consequently, prices are forecast to weaken further,’’ he said.
The median house price is tipped to rise by two per cent in the three years to June 2018.
Mr Kusher said the magnitude of the drop in Darwin was a little bit bigger than CoreLogic RPDatahad thought it would be.
“We thought that certainly Perth and Darwin would start to slow but perhaps not drop as much as they have. We expect those declines to continue over the next 12 months.’’
Terry Ryder said the impact of the $30 billion gas pipeline project in Darwin had worked its way through the system.
“Darwin had significant growth in 2011 and 2012 and it is levelled out now it is going backwards.’’
PERTH
BIS Shrapnel prediction: 3 per cent
Reality: -0.9 per cent
Mr Zigomanis said the Perth residential market was steadily weakening as a result of a slow down in resources sector investment. Demand had tapered off, vacancy rates had risen and a fall in rents resulted in a drop in prices.
BIS Shrapnel tipped Perth’s median house price to be three per cent lower by June 2018.
Mr Ryder said Perth had experienced its price growth in 2011 and 2012.
“Perth’s market in terms of activity peaked in the middle of 2013 so it has gradually been declining for the last two years,’’ he said.
He said its growth was completely stagnating or slightly negative and that was exactly what he had expected would happen.
Mr Kushersaid there were significant signs of weakness in the Perth housing market, along with many of the regional markets linked to the resources sector.
ADELAIDE
BIS Shrapnel prediction: 2 per cent
Reality: 4.5 per cent
Terry Ryder expected the Adelaide market to show a similar pattern to Brisbane. “We have seen quite a significant uptick in activity in Adelaide,’’ he said.
“South Australia, does not have the economic oomph of some of the other states and doesn’t have population growth as big as some of the other states, but it does have growth and it is very affordable. We are seeing areas of Adelaide rising gradually so we are expecting price growth, but moderate price growth in Adelaide and that is pretty much what has been delivered.’’
Mr Zigomanis said there would be little to place upward pressure on prices apart from low interest rates this year.
“As a result, the residential market should remain challenging’’. The median house price is forecast to be one per cent higher by June 2018.
HOBART
BIS Shrapnel prediction: 1 per cent
Reality: 0.9 per cent.
Mr Zigomanis said prices were expected to remain relatively stable, because of low interest rates and improvements to interstate migration.
BIS Shrapnel tipped Hobart’s median house price to grow four per cent over the next three years.
Terry Ryder said there were signs of a gradual rise in activity in Hobart.
“We are starting to see investment coming back into Tasmania and that is starting to be reflected in its property market.
“There is a rise in activity in Hobart and to a lesser extent Launceston, and so we are going to see some moderate price growth. I don’t think it is going to be huge at all, but it is going to improve after several years of stagnation.’’