The Reality Of Real Estate: An Overview Of Australia's Property Market

2018 has seen a subtle shift in Australia’s property market.

For the first time since the GFC, there has been sustained movement south in the two big performers – Melbourne and Sydney. This is primarily due to two factors: banks tightening the reins on investment lending and governments doing the same with rules surrounding foreign investment.

According to the Foreign Investment Review Board, Chinese investors represented the largest section of foreign buyers in the Australian property market – spending around $32 billion between 2015 – 2016; primarily in Sydney and Melbourne.

Since Melbourne and Sydney were the main benefactors of foreign investment, it stands to reason that they would experience the greatest impact from the withdrawal of that income.

Whilst other capital cities are experiencing stagnant to low price growth, the two major cities, which have experienced steady growth for years, have seen a drop off – albeit a small one. Of the two, Melbourne has held interest due to its lower property values in proportion to distance from the CBD – making Melbourne the more attractive prospect for long range property investment.

So what is the good news?

Opportunity knocking

As of 1 July 2018, the APRA’s restrictive cap on property investment, which was designed to inhibit risky lending, is set to be discontinued. Combine this with lower across the board median property values in Melbourne and Sydney, and the time for property investment seems ripe. It is to be expected that banks, which had been restricted to more conservative lending, will begin to woo investors back to the market.

In a buyers market, investors would be wise to take this opportunity to buy well, by enlisting the services of savvy, hard working Melbourne property managers to best position themselves with:

Optimum rental
Solid tenants
Secure, hassle-free management
Maintenance and repair resolution

Investment sense

According to reports by the Australian Foreign Investment Review Board, foreign investment in Australia’s property market has literally collapsed with a whopping 67 percent drop in residential real estate approvals.

With foreign investors forming a major part of the ‘buy to rent’ market, it stands to reason that the rental market will experience a substantial tightening. The result? Increased rental income for investors fortunate enough to hold a strong portfolio of strategically placed properties.

For those looking to buy a home in Australia, house and land packages provide an easy way to invest in property. These packages offer a straightforward option to secure both land and a home, often at a more affordable price.

Around the capitals

Melbourne – According to Domain business editor, Chris Kohler, there are key indications of how the Melbourne property market will play out over the next couple of years.

Continued strong migration of up to 1,500 families per week is straining housing supply
Rising demand for rentals due to low vacancy rates
A revival in first home buyer grants and concessions

Shift – prices down 0.5 per cent in May but up 2.2 percent overall during the 12 months to May.

Perth – Established home sales are expected to increase on 2017 levels, with a decline in listings resulting in price stability rather than growth.

Shift – down 0.1 per cent for the month and down 1.8 per cent for the year.

Brisbane – tipped to experience modest growth over the next twelve months and beyond.

Shift – rose 0.2 per cent in May and 0.9 percent over the past year.

Sydney – after a long stretch as a sellers’ market, Sydney is tipped to become a bargain bonanza, particularly over the traditionally quieter winter months. The prestige market is still experiencing strong results as buyers are continue to be prepared to pay for the best locations.

Shift – prices dropped 0.2 percent in May and a further 4.2 percent over the past 12 months to May.

Hobart – The recent minor boom period is likely to continue.

Shift – prices rose 0.8 percent for in May and 12.7 percent for the year.

Canberra – the lower ten percent of properties experienced the biggest growth. Modest rises expected to continue in the sub $400,000 sector.

Shift – sale prices fell 0.1 percent for the month but rose 2.3 percent over the past year.

Adelaide – interstate investors, priced out of Sydney, are circling Adelaide and are expected to keep prices steady.

Shift – sale prices rose 0.5 per cent for the month and 0.6 percent over the past year.

Darwin – the real estate boom is over and already stagnant prices are expected to drop further.

Shift – sale prices dropped 0.2 percent for the month and down 7.9 percent for the year

During the GFC, many investors sat back and waited for prices to plummet before dipping their toes into the market – many are still waiting… The fact is, unless interest rates take a dramatic turn northward, sellers will merely hunker down and wait out the current climate.

Investors would do well to consider house and land packages and new builds, as developers will be among the tightest hit by the current foreign investment strictures. If you have money to spend and are looking to invest in the Australian property market, this may the opportunity you have been waiting for…

Article from E Hudes