Happy New Year
2016 looks like being a mixed bag for the property market and whether buyers or sellers will come out on top will depend where you live.
The market has its share of doomsayers who predict that 2016 will bring soaring capital city prices back to earth with a thump, particularly in the overheated Sydney and Melbourne markets.
Many say those cities were due for a slow down anyway, with more than a year of double-digit price growth proving to be unsustainable and risky for the broader economy. The lending regulators, APRA and ASIC, took their own steps to slow the market throughout 2015 by tightening lending regulations for investor borrowers, which effectively pushed up interest rates for those customers. Some lenders ceased investor lending completely.
In turn, those red hot markets cooled considerably and it was noticeable as soon as the Spring property season opened, with more properties listed for auction and clearance rates below expectations.
Corelogic RP Data reports Sydney and Melbourne recorded price growth of 12.8 percent and 11.8 percent in 2015 but may only reach one- to three percent for the coming year.
What this means for Sydney and Melbourne home buyers is some welcome relief from high prices and the breathing space to make informed decisions about property purchases, rather than the race to the top of the price bracket it has been.
Buyers are likely to have options of properties to choose from and may not have to compromise as heavily on location and amenity as in previous years.
But it seems the flow-on effect of this market cooling will extend to other cities which have not experienced strong price growth in 2015, such as Canberra, Perth, and Darwin.
According to Corelogic RP Data, in the closing months of 2015, house prices in five of the eight capital cities declined, with Sydney down one percent and Melbourne dropping half a percent.
Melbourne’s growth is expected to be stronger than Sydney for the coming year, with some significant developments still in progress in the city. However, experts say the money is on Brisbane for strongest property price growth in the short term.
Property observers agree Brisbane is at the bottom of its price cycle and are expected to climb steadily throughout the year, while rental yields should stay healthy across South-East Queensland.
The highest yields in the country are found in Hobart and Darwin, both on 5.4 percent. This figure is predicted to climb in Hobart, but fall in Darwin.
SQM Research warns Darwin’s property market will find itself in the doldrums in 2016, as will Perth, which had not yet seen the bottom of its falling prices. Canberra would also stall as its housing market was oversupplied, as would Adelaide.
Short story, if you are selling in Brisbane you should do well, and if you are buying in any of the other cities you are likely to get more for your money this coming year than last.
Image credit: Christopher Chan