As the property market slowed and prices fell in 2018, interest in the future direction of the market is more prominent than ever. Many Australian and overseas investors are wondering whether it’s time to buy, hold or sell. Sydney experienced a meteoric rise in prices over the past five years with investors and owner occupiers moving to ensure they don’t miss out.
After a tumultuous 12 months, it’s looking like the market is going to turn a corner. While some analysts like the CBA are pessimistic, many others including the Domain Group and SQM Research expect a turnaround in 2019.
What Causes Downturns?
Prices have been gently falling in the two biggest capital cities, Sydney and Melbourne. The current downturn can be attributed to a range of factors including:
- A surge in unit development ahead of expected population surges
- Rising interest rates
- APRA clamp down on borrowing for investors
- A decline in credit availability
Drivers such as population growth, interest rates, lending, unemployment rates and market sentiment are set to improve in a way that will result in a turnaround for the property market.
Property Price Forecast
The broader economy is performing well, meaning house prices won’t crash hard in the first half of the year as some investors have feared. According to Domain’s Property Price Forecast report, house prices in major Australian cities are predicted to grow as follows:
| 2018 | 2019 | 2020 |
Australia (Combined Capitals) | -6% | 1% | 4% |
Sydney | -8% | 0% | 4% |
Melbourne | -9% | -1% | 4% |
Meanwhile, units are predicted to grow as follows:
| 2018 | 2019 | 2020 |
Australia (Combined Capitals) | -3% | 2% | 3% |
Sydney | -3% | 3% | 5% |
Melbourne | -1% | 1% | 1% |
Units are forecasted to perform better than alarmists may have thought, with an average projected growth of 2 to 3 per cent over 2019.
An Optimistic Future
As banks recover from the bruising royal commission and both lenders and borrowers adjust to the new lending standards of 2019, we can expect prices, lending rates and market sentiment to all improve. Labor’s proposed changes to negative gearing may also lead to a price hike. This is because some investors will rush to buy sooner as a property investment strategy to take advantage of the grandfathering of existing investments.
Making Smart Investment Choices
Does this mean investors should wait? Not necessarily. By making clever investment choices, there are still plenty of gains to be made. The key is to understand what attracts people to properties. The key to successfully investing in rental properties is to look for things like infrastructure upgrades, quality schools and access to shops, restaurants, public transport and green space.
Need Help with Property Investment Strategies in Australia?
If you’d like advice on how to invest in property or services relating to buying and managing investment properties in Australia, speak to the experienced team at H&T Realty in Sydney. Countless investors rely on our experienced consultants for property investment strategies and property investment tips. Call us today on 02 8045 5388 or contact us online.
