If you’ve been studying the property market over the past few years, you can be forgiven for losing hope that you will ever see your property investment goals come to fruition. An answer to the question “when is a good time to buy a property?” may seem elusive, but there is an end in sight. The patient few among us know well that where the Australian property market is concerned, it’s always a waiting game. There may be highs and lows but comparatively speaking, it’s a cyclical market that alternates between being a ‘buyer’s market’ or a ‘seller’s market’, welcoming a new cohort of property buyers into the fold with each period of adjustment. The current adjustment, it seems, will create opportunities for buyers between now and well into 2019.
The market’s dynamics have been shifting for some months now, and this is a great relief for many would-be homebuyers after a particularly long period of consistent growth. Many buyers who have been priced out of the market for some time will now share widespread relief that prices in Sydney and Melbourne in particular appear to have reached their peak. According to a recent report from BIS Economics, property values will continue to fall over the next few years. This may largely be due to the restrictions put in place by APRA last year to tighten lending conditions, specifically around interest-only loans. The report predicted that prices would fall over the next couple of years by between 3 and 5 per cent, figures that are in line with a NAB group economics survey that predicted a drop of around 2.5 per cent for 2019.
Sydney and Melbourne will be most reactive it seems, while a softening of prices in other national capitals is expected to be less evident. Local markets are all driven largely by their own unique forces around supply and demand, and, Hobart and Canberra in particular will continue to experience solid growth. Those wanting faster capital growth for their buck should consider relocating to Tasmania, where median house prices for large family homes continue to deliver; whereas Sydneysiders may be lucky to pick up a tiny studio apartment for the same amount of money. Canberra is also a great investment destination, with multimillion dollar lake-front developments changing the face of the city and presenting interesting opportunities for those able to get in now – growth is expected to rise by more than 15 per cent in the year or two ahead.
Oversupply is also partially to blame/thank for the anticipated downturn and RBA’s concern with regard to apartments and units on the east coast is yet to be alleviated fully. A savvy investor may snap up a bargain, in a market bursting at the seams with freshly built stock in towering, mostly vacant developments. A purchase in Brisbane however, should only be made if you have sufficient patience to wait but the revival of residential living in the CBD assures a positive long-term outlook. Having said that, Brisbane is not alone when it comes to apartment gluts and many cities – we’re looking at you Melbourne and Perth - are guilty of jumping the gun with inner city apartment construction. The skylines may be transforming, but until occupation levels rise, it’s all just a shiney and potentially costly façade.
As Australians, we are fortunate to have a very stable national property market and diversity between each of the individual state property markets. The Sydney market is as different from the Hobart market as the Perth market is from Melbourne. So, if your local property market has been too competitive to provide you an opening in recent years, start to pay attention to what might change in the months ahead. If the local market doesn’t appear to offer positive forecasts, why not check out some regional markets instead? Numerous towns in regional Victoria, New South Wales and South Australia are offering great investments, for example. Many regions continue to offer excellent opportunities, not only for investment but also for those looking for a lifestyle change, or simply more affordable living solutions.
Amidst all of the market changes, the one thing that has maintained consistency is first home buyer activity. Strategies introduced by the Federal Government at the last budget that were thought to be detrimental to them, have not had as much of an adverse impact as expected. First Home Buyer Grant applications have surged in almost every state, with most of the key first home buyer demographics – young professionals, newlyweds and millennials taking advantage of incentives available to them.
Of course, the property market is an important consideration when you want to invest, but really, the best time to buy property is when you are ready - both mentally and financially.