2017 is the year many of Australia’s hottest markets changed tune after a 5-year spell, with median house prices in Sydney stacking on $530,000 plus and Melbourne adding another $350,000.
But what about the year ahead? We’ve highlighted some of the trends expected for 2018.
After several years of strong gains, Sydney’s property prices have started to decline. Growth in Melbourne has slowed too, especially in the latter part of the year. Property heads think these trends will continue into 2018.
Head of ME Bank Loans Patrick Nolan was reported as saying that this ‘slowdown in house price growth’ is what banking regulators want, and should be expected to continue in 2018.
Economists from ANZ predict RBA interest rate hikes next year, but they’re alone in this forecast.
They say APRA’s tightening of monetary policy will cause weakness in the property market, but also say these declines are likely to be localised.
Senior Economists from ANZ, Daniel Gradwell and Joanne Masters said in a recent report.
“APRA’s tightening on investor borrowing and interest-only loans has resulted in higher interest rates for those borrowers, and lowered demand for housing.”
Gladwell and Masters followed by saying that there is nothing to suggest prices will enter widespread declines.
Nolan predicts that if investor spending decreases in 2018, first home buyers will have more opportunities in the market.
“They will continue to benefit from competitive interest rates, new concessions (if eligible) and ample apartment stock, although checks should always be made to ensure quality buys,” he said to domain.com.au.
Stamp duty taxes are making upgraders more likely to stay put and renovate, rather than sell up.
New research by Westpac has found a 14% increase in the number of homeowners thinking about renovating over the next 5 years.
HIA economists also predict big growth in the renovation market, right into the 2020s.
Renovators have made strong moves through 2017 too, with many homeowners choosing to leverage equity in their home and low interest rates, to fund upgrades to their existing home.
Regulators in 2017 have been working hard to dampen investor lending, which means owner-occupiers are getting more love.
Nolan said that limits on interest only growth and investor lending has meant banks are competing to offer great loan solutions for owner-occupiers.
Analysts at Morgan Stanley confirm that although investor rates have tightened, principal and interest loans for owner-occupiers have had lesser increases.
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