Timing the market may seem critical, but, is it better to sit and wait? or better to get in and get involved?
Fortunately for us, the Australian market doesn't move as one, it has many different facets that can often result in some markets being bullish when others a bearish. A perfect example of this is the Sydney market over the last 5 years compared to the Perth market.
It's important to monitor the trends to know where the current market is at, to avoid buying something that is overpriced or in an area that's taking a downturn. Let's take a look at the different stages on the property clock and we will cover where each city is currently at.
First of all let's just refresh everyone on how the Median Australian house prices have been progressing over the last 90 years. See Below.
Now obviously there is a major decline through the great depression, but since then, the long term trend of house prices in Australia has been on a steady incline. Throughout this period though you will notice we have peaks and troughs, but not all areas around Australia move in sync and it's important to note this. Because this can be the difference between you sitting on your hands and waiting for the prices to change, or making an educated investment decision and buy into a market that is growing.
Sydney
As most of us are aware the Sydney market is finally going through some correction and across the city we have seen the majority of average prices drop, since June '17. It's looks to be getting to the clock in a position of oversupply. However, it's definitely not in a position of hitting an oversupply. It is simply the affordability of the market as a whole and we believe we will be seeing Sydney sitting on a slight decline to a pretty stagnant year as a whole.
Darwin & Perth
Both are in a pretty similar place although we are finally starting to see signs of the Perth market going into a recovery phase, with prices on the rise for the first time since 2014. Meanwhile, Darwin is still showing declining prices so it tells us that it's not yet near a recovery phase. How far away? only time will tell.
Brisbane
The Brisbane market is the quiet achiever sitting in the back corner minding it's business. Brisbane has one of the strongest economies of all Australian cities, although the price growth has been clouded by the oversupply of apartments in and around the Brisbane CBD. This is evident when we look at it's surrounding cities, Sunshine Coast and Gold Coast which have both shown fantastic growth in the past 12 months where Brisbane has barely moved. Although it has been on a steady incline since 2013, it has yet to had a big jump and has been pretty lacklustre.
Adelaide
The market in South Australia was a hotspot for investors 2-3 years ago and although prices are still driving up, the growth increase has significantly dropped from its previous 2 years. With less than 8000 new jobs created in 2017, a hell of a lot of supply of dwellings and in some areas prices are starting to decrease, i think we are looking at the peak of the Adelaide market for the time being.
Canberra
8% growth in 2017 and prices pushing closer and closer to Sydney, tells us that the Canberra market has been a quiet achiever. I would expect it to continue to grow this year although much more moderately than the figures of 2017. Another year of bullish prices but is suggesting signs of coming close to a peak in the next 12 months.
Hobart
Some of the lowest vacancy rates, high rental yields and some of the most affordable properties in Australia has made Hobart the biggest achiever in growth over the last 12 months. Standing well out in front of the pack with an annual growth reported over 14% in 2017, Hobart looks to be the latest hotspot. Why call it a hotspot? It is a very small market and it doesn't take as much to influence it. Plus, the average price in hobart is pushing closer and closer towards the average price of Brisbane - where do you see better long term growth?
We expect Hobart to show continued growth over the next 12 months, but remember, it's sustainability is what clouds this market. Be careful.
Melbourne
If you have been to our seminars, talked to us or read our articles, by now you know that Melbourne is the market to be in for the short term and the long term. Melbourne is playing catch up to Sydney - it is predicted to grow to be a bigger city than Sydney over the next 30 years and the undersupply of dwellings in Melbourne is a representation of that already. The population is growing at a rate faster than the infrastructure can be built. Prices are much more affordable (than Sydney) but they are slowing down in some areas. The demand is very much still there and although it is in the boom phase, we expect it to continue to show very strong growth for the coming years.
I hope this gives you a bit of an insight into markets that are moving and markets to be wary of. At the end of the day, the right time to invest is when you can comfortably afford to do so.
However, it is essential to still analyse the market in order to avoid peak prices or a markets moving towards a slump. This doesn't mean you sit on your hands and wait, this means you find a more appealing market.
If there is anything else you wish to know about the property clock or market information, then please feel free to contact us.
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