He who lives by the crystal ball soon learns to eat ground glass – or so the adage goes.
Forecasting the Australian property market is no different – some spectators are predicting an early trough, while others are saying several cities are still set to boom. There are known knowns, and known unknowns.
The national property market isn’t homogeneous – it can change from street to street, suburb to suburb, and predicting these trends is tough at the best of times.
The New Daily spoke to five leading pundits about what they expect will happen in the market over the next 12 months.
All of them agreed that the Reserve Bank of Australia’s decision to lower interest rates, APRA signalling it’s open to loosening credit lending restrictions, the federal election being over and the first home buyers grant the Coalition government has promised, all signal good news for the market.
“What does this mean in the wash?” said managing director of Propertyology Simon Pressley. “Those four things are national, so every location will benefit, they’re things that affect every location.
“It’s hard to put a specific figure, but I think they have potential to improve prices by five per cent above what any individual city would have done without them.
“Sydney last year declined by 10 per cent, I think they’ll limit an extra drop by five per cent. Other capital cities, such as Adelaide and Brisbane and Canberra, they have the potential to see between four and six per cent growth.”
Predicting we’ll see the trough in 2020, Mr Pressley said we wouldn’t experience double-digit growth across our capital cities for some time.
“Based on events here and now today, I don’t believe any of our capital cities have double-digit potential in the next few months. But I do believe a few of them do in the next three years.”
Director of Suburbanite, Anna Porter, expects to see the Sydney market even out a lot quicker than the rest of the capital cities.
“Sydney will hit the bottom towards the back of this year and Melbourne will follow next year.
“For Sydney, I’m expecting one to two years of soft conditions with no real growth for five years. Melbourne is the same, it’s actively correcting.”
Tasmania is about to come off its boom, Brisbane will see a steady market and Darwin will continue to feel the downturn in the coming months, but there will be good news for Adelaide and Perth, Ms Porter said.
“Adelaide could get close to double-digit growth, I’ll also say the same of the ACT, if not double then high single and I think in Perth in the prestigious suburbs, you might see that growth happen.”
The downturn tide is already tuning said property economist, Pete Wargent, who is predicting we’ll see the trough later this year.
“It’s already turning but again it’s dependent on sub-region.”
“Some parts of Sydney, like western Sydney, there’s a big pile of unsold stock that needs to be chewed through, but lower north shore stock levels are already low so those markets will likely turn quickly.
“I don’t think prices will be as volatile in the immediate future because I think there’s less appetite from a regulatory perspective.”
After the trough comes the plateau, said Jeremy Sheppard, head of research at Sell or Hold.
“We’re likely to see the trough sometime in the next six months and I would be predicting pretty much zero growth in Sydney for the next three years.
“With Melbourne, I expect the trough will bottom a little bit sooner but I can’t see exceptional double-digit growth for years to come.
“It takes a long time for people to regain confidence in the market and for people to start thinking ‘oh this is good value for money.’ It’ll take a long time for that.”
The focus is often on the big cities, but it’s the regional centres that are about to get hot, said Hotspotting founder Terry Ryder.
“There’s a big focus on the big cities but most of the strong growth markets are regional.
“Geelong has been strong, Ballarat and Bendigo have been solid and that will continue, the recent changes will keep that going.”
Regional Victoria, New South Wales, Tasmania and Queensland are all about to experience strong growth, as homebuyers chase affordability and better rental yields, Mr rider said.
“In regional Victoria, 89 per cent of houses had median prices higher than a year ago, in regional NSW it was 70 per cent, so it’s completely a different trend contrasting to Sydney.
“In QLD 60 per cent of houses had higher prices. That’s increasing because regional areas that were previously in a downturn are bouncing back – Mackay is a good example.
“There are some very strong regional markets across the nation.”
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