Property Market Update - October 2016

According to M Yardney (stats)
Sydney and Melb still the star performers.....I think 2017 will be very interesting year, wish I had a crystal ball

WHAT’S HAPPENING AROUND THE STATES?
At the end of last year many were prepared to write off the Sydney property market saying that not only was the book over, but Sydney property values were going to crash.

But Sydney’s fundamentals are still strong and after a slight retracement at the beginning of the year, Sydney’s price growth has been stronger than any other capital city over the last 12 months

There are fewer than 20,000 dwellings currently being advertised for sale across Sydney, which is less than half the number of homes that were listed for sale five years ago. Reduced stock levels create urgency in the market, adding to the upwards pressure on dwelling values.



The Melbourne property market also performed strongly over the last 12 months, with strong population growth (close to 2% per annum) and a relatively strong economy creating more jobs have underpinning it’s growth.



Brisbane’s property market has confounded those “hot spotters” who were predicting it was going to be the place to be this year.

While overall growth has stagnated, the Brisbane market is very fragmented and there are still some areas that are performing respectably and have good investment prospects.

On the other hand there is a significant oversupply of new high rise off the plan apartments overshadowing the inner city area and nearby suburbs.



Adelaide has delivered a very respectable 6.5% growth over the last year, however with total growth of only 9.4% over the past 5 years and fewer long term growth drivers than the other big capital cities, I would not consider investing there.



The Perth property market is still in its slump phase with a significant oversupply of properties for sale and values still falling.

Similarly the oversupply of rental properties in Perth is causing rents to fall.

There is still some considerable downside to the Perth market as it works its way through the excesses of the mining boom:



Similarly there are few long term growth drivers for Hobart property prices, and even though some commentators are suggesting it’s a good place to invest “because it has to catch up”, with minimal population growth and slow economic growth there seems little reason for property values in Hobart to grow substantially.

Despite this year’s growth spurt Hobart has underperformed over the last decade with property prices only increasing just over 14% over the last 10 years.



Darwin property values are lower than they were 12 months ago, and like Perth, I believe there is more down side yet to come.



Canberra is the only housing market, other than our 2 big capital cities. where the cumulative capital gain has been greater than 20% post GFC.



Economic data remain mixed

• New lending to both investors and owner occupiers has fallen from recent peaks with investor lending recording a much greater decline however, investment lending increased in July
• Total housing credit is rising however, investment credit growth continues to slow and is now increasing at a rate which is less than half that of APRAs 10% threshold for annual growth although monthly data shows growth in investor credit is picking-up
• The rate of population growth at a national level is lower than recent highs but has steadied over recent quarters thanks to improving net overseas migration
• Dwelling approvals eased a little in August but remain at historically high levels
• Consumer sentiment remains at a fairly neutral setting
• The unemployment rate was recorded at 5.6% in August although employment growth continues to be largely driven by part-time rather than full-time employment
• The Reserve Bank left official interest rates on hold at 1.5% in October 2016

You can see the important link between consumer sentiment and house price sales and values in the 2 graphs below:



Of course jobs growth is an important driver of our property markets and lately the bilk of the new full time jobs have been created in Sydney and Melbourne

 

Are the comments at the end of each yours or Michael Yardney?

Pretty interesting comment...
Adelaide has delivered a very respectable 6.5% growth over the last year, however with total growth of only 9.4% over the past 5 years and fewer long term growth drivers than the other big capital cities, I would not consider investing there.

I believe next 12months will be similar growth.

 

It's all Michael Y's content.

 

I hate to say it but I told you so.

It was around last year this time (or pretty much from mid 2015) that certain people on this forum started bashing Sydney and talking up Brisbane. My posts about Sydney and Brisbane and the posts of those who responded should still be available on this forum. There were even people predicting Sydney prices will drop by as much as 20% in one year .

Brisbane, unfortunately, has no reason to grown. Even the minimal growth it has done is as a result of people who have convinced themselves that if Sydney is out of investing budget then Brisbane magically should be the next best spot and they invested in it.

I strongly believe, compared to other major cities and business hubs around the world, Sydney is still relatively cheap. If interest rates stay where they are, I wouldn't be surprised if it continued to grow.

Brisbane on the other hand doesnt have any reason to grow, it doesnt have the size of NSW's economy, it doesnt have the weather that Sydney offers, it doesnt have the infrastructure and amenities of Sydney, It doesnt have the universities we have here, nor does it have the appetite of the typical asian buyer to be wanting to invest in it. I think if anything Brisbane prices are highly inflated. If I had a property in Brisbane, the time to sell would be right now.

 

All MY comments.
Only my comment at the top.

 

[QUOTE="Tenex, post: 290201, member: 2640"
Brisbane on the other hand doesnt have any reason to grow, it doesnt have the size of NSW's economy, it doesnt have the weather that Sydney offers, it doesnt have the infrastructure and amenities of Sydney, It doesnt have the universities we have here, nor does it have the appetite of the typical asian buyer to be wanting to invest in it. I think if anything Brisbane prices are highly inflated. If I had a property in Brisbane, the time to sell would be right now.[/QUOTE]

I get this, but apparently there are some markets in Brisbane that have moved, whether it will have the sustainable growth moving forward is the question. If anyone has achieved growth may be time to sell up.
I am not looking at his market but what some have posted.

 

I'm not experienced enough to predict hotspots or markets, and this is not refuting your views. All I can report is that in the past 4 - 6 weeks I've attended almost every open house and auction in the asian suburbs of Brisbane and they might as well start holding auctions in mandarin/cantonese rather than english.

But then again I'm not in Sydney so maybe it's the same there except magnified multiple times...

 

So is it just a case of chinese investors looking for places outside melbourne and sydney for potential investments..? Hah.. I reckon Perth could do with a bit of attention

 

What do you think?

 

I believe Adelaide will continue to grow steadily, can't see massive boom but no reason for it not to keep kicking on.

- low rates fueling subsequent buyers/upgraders along with those seeing buying cheaper than renting.
- good councils, most of Adelaide is pretty open to infill development - south, west and northeast.
- prestige schools - east/central, every week clients are buying in areas just to get into schools, even families without kids are planning it for the future.
- demand for brand new quality houses ~<10km from the city, not sure if this has happened before, but seeing many brand new quality houses sell for well over what I would expect.

 

@Tenex if you know the history of brisbane house price, you will know you conclusion is totally wrong.

Things will change, which moves the cycle.