A complete review and forecast of the Australian Property Market, State by State as we see the debris clear from a 2 year decline and start to get an idea where the best suburbs to invest may appear over the remainder of the year.
The great ever-turning wheel that is the Australian property market seems to be shifting back up after 2 years of steady declines across most of the country. As the results for August start to come in, evidence that we have reached a floor in the cycle is becoming more concrete. CoreLogic’s July data showed the second month of minor increases across the majority of the Australian property market and data just released this morning has shown another positive month with an impressive .8% across the country reporting the first rise of national value dwellings since October 2017.
July and August presented good news for Sydney, Melbourne, Brisbane, Hobart and Darwin all recording subtle rises in median values with regional successes for the Northern Territory, Tasmania and South Australia. Sydney and Melbourne had a dramatic recovery in August and the slower but steady Brisbane had it’s second positive month in a row which is expected to spread across the Australian property market for the remainder of the year.
With early reports from August looking to show more of the same, join us for a complete Australian property market review and forecast of the nation’s capitals.
The last few months have seen dramatic alterations in market sentiment triggering the beginning of an Australian property market resurrection. After a prolonged period of potential buyers and sellers holding off we’re starting to see a return to action as seen from increased listings and more feet on the pavements at viewings after a long period of little more than crickets. The big hitters across the Australian property market in August were Sydney and Melbourne benefiting from a reverse in demand with increased buyers fighting over minimal stock.
“Multiple Market Changes Have Lead To A Positive Sentiment Shift”
- Liberal Government Win – An upset win by the Morrison Government removed an air of Australian property market uncertainty surrounding changed legislation to negative gearing and weakened tax breaks for investors proposed by Labour.
- Consecutive Interest Rate Cuts – Following two consecutive interest rate cuts from the RBA with further cuts are expected, more potential buyers are looking to take advantage of favourable mortgage rates whilst they can.
- Loosened Lending Restrictions – APRA’s removal of the 7% lending restriction has allowed a number of previously unable buyers to enter or re-renter the market
- Housing Affordability Back to 2016 Levels – A positive effect of 2 years of the entire Australian property market experiencing sliding house prices is housing affordability has reached lows unseen since 2016, making for a more favourable climate for buyers.
- Positive Media Coverage – Pre-election the media was riddled with fear-mongering having a restrictive effect on market activity which has now been replaced by more moderate or positive reports
Australian Property Market Review: BRISBANE
When Sydney and Melbourne were enjoying the benefits of a rapid boom the Brisbane Property Market remained one of the few Australian property market capitals to remain relatively still. On the flipside, this meant Brisbane was relatively immune to the adjustment and decline of the past 2 years with many of the best suburbs to invest in Brisbane either staying firm or rising whilst Sydney and Melbourne plummetted. Brisbane is only 2.9% below it’s peak as a result of a mostly stagnant market for the past 5 years and has been one of the safest cities across the Australian property market.
Brisbane has suffered from a saturated apartment market that Remains 12.5% below their 2010 peak but is a market that we are seeing starting to return to vibrancy with less supply of new properties and an increased population occupying existing apartments. Unit owners will be hoping to see some of the best rental yield Brisbane has offered for some time in the next few years as demand matches supply which will see it return demand after being one of the more saturated markets across the entire Australian property market.
Brisbane is certainly an Australian property market to keep an eye on over the next 2 to 5 years. The cities prospects remain some of the brightest across all of the nations capitals as it boasts some of the most affordable properties across the capital cities with strong housing fundamentals to support future growth. The next suburbs to boom in Brisbane 2019 and beyond will likely come from middle ring suburbs and developing areas in Greater Brisbane like the satellite cities including Springfield and Ripley.
Brisbane is seeing the highest interest rate migration as residents from competing cities look to capitalise on the affordability with investors attracted by the fact that when it comes to the best rental yield Brisbane properties are offering greater options compared to it’s southern counterparts.
The economic situation of Brisbane is supported by incredible infrastructure developments to continue over the next decade. Brisbane will see large job growth over the next few years as major projects such as the Adani coal mine, Cross River Rail Road, Howard Smith Wharves and Queens Wharf projects continue to gain steam. Brisbane’s stable and affordable housing, growing injection into infrastructure and increased cultural landscape make it one of the most attractive prospects for buyers to live or invest and remains one of our favourites to watch.
Australian Property Market Review: SYDNEY
Housing values in Sydney have fallen almost 15% since the July peak in 2017. The Sydney Property Market has arguably been the hardest hit of the nations capitals especially on the upper end of the market. As far as the best suburbs to invest Sydney hasn’t offered as many attractive prospects as other less volatile markets. Sydney has reported slightly positive values for the second consecutive month in July which is slowly restoring buyer confidence.
Buyers looking for investment grade property are regaining interest in Sydney gradually as the cycle looks to restart and many analysts are predicting Sydney prices may currently be as low as we will see them for quite some time.
Price predictions look to see modest increases for the remainder of the year and are worth keeping an eye on before more noticeable increases for 2020.
Australian Property Market Review: MELBOURNE
The Melbourne Property Market has told a similar story at the end of July as bigger brother Sydney. Again reporting tow consecutive month-on-month rises reporting a very modest .2% rise in July taking the annual change in Melbourne’s values to – 8.2%.
As a whole property prices in Melbourne are supported by a resilient economy and boasts the strongest population growth in the country. Decent jobs growth and a population increase supported by over 30% of the nations overseas migrants calling Melbourne home.
The Melbourne unit market has seen the strongest growth up .4% in July while house values were a smaller .1 which has instigated the return of buyers which is in turn giving home owners more confidence to consider a sale.
A factor Melbourne certainly has in its favour is its status as one of the top 10 fastest growing large cities in the developed world with a 4 year population prediction of 8% plus. Melbourne’s growth will remain gradual over the next 6 months with the majority of opportunity likely to come from the middle ring as population growth forces an increased demand in these suburbs. August has shown Melbourne continues to be one of the strongest cities across the Australian property market as buyer demand out weighs properties on the market.
Australian Property Market Review: ADELAIDE
One of only three capitals not to record median growth during July, it certainly isn’t alarm bells for the Adelaide Property Market. Market sentiment is strong and outer suburbs of Adelaide are providing buyer and investor interest making it one of the countries most interesting prospects.
Looking across the entire Australian property market, Adelaide remains the most affordable national capital but has continued to fall since it’s December 2018 peak overall, however a number of the outer suburbs are reporting reasonable growth.
A limitation is that Adelaide will have difficulty competing with the job growth, economic growth and population growth of the three larger capitals. However, this hasn’t stopped numerous suburbs pinpointed in greater Adelaide as solid investment opportunities over the short to medium term.
It is likely Adelaide will be overlooked by investors looking at more long-term strategies.
Seaton and Brompton are two suburbs to watch.
Australian Property Market Review: HOBART
Hobart has been by far the outlier of the past three years recording fantastic results for investors holding property in the market. CoreLogic’s latest data, however, is suggesting the honeymoon may be over with prices now .8% below the March peak. At a time when the rest of the Australian property market is recovering investors may be looking to exit the Hobart market.
It looks as though the Hobart goldrush that saw countless investors racing to capitalise on it’s short-term growth at a time when the Australian property market was on the way down almost every where else. The rise which was driven by an artificial demand and minimal supply wasn’t backed up by significant job growth and minimal infrastructure spending or actual population growth suggests Hobart is likely to decline in median value albeit gradually.
Australian Property Market Review: PERTH
Mining boom investors have been seeing black for the last 5 years in the Perth Property Market now over 20% below the June 2014 peak. The past year has seen another 8.9% hit to the median values.
The Perth Property Market should still be approached with excess caution and is still far from one of the more attractive Australian property market prosepcts. A combination of weak economic and demographic conditions have already and will likely continue to hurt prices. Although Perth certainly boasts the most affordable capital city housing the current climate implies it could still be a number of years before we see any kind of significant recovery.
The Final Say
The cycle is certainly looking to turn across the entire Australian Property Market. Brisbane is likely a year or two away from significant growth but is due for a historical catch up to Melbourne and Sydney. The two biggest capitals are likely to show minimal growth for some time but are certainly presenting positive signs. There are opportunities presenting across the country but are dependant on the strategy you are taking to your investments as to where will provide you with the best results. Australia still has strong migration numbers and with selling conditions easing legitimate sellers won’t be forced to offer such drastic price reductions.