2019 is just around the corner, and of course, we’re wondering what the property market has in store for us in the New Year.
We’ve collated information from Senior Economists and other finance heads, to get a picture for the year ahead in property.
Senior CBA economist Gareth Aird spoke to Smart Property Investment about his predictions for housing prices in 2019.
His predictions are based on data and patterns from buyers over 2018.
“The evidence suggests that dwelling prices will continue to deflate in the very near term,” he said.
“There will be significant variations between capital cities and indeed suburbs within the same cities, but the broader trend should be one of continuing mild price declines.”
Quoting CoreLogic data, independent buyer’s agent, Richard Wakelin, told the Financial Review that after 5 years of growth from 2012 to 2017, median property prices in all capitals decreased by 5%.
Sydney led the way, with annual decreases of 8%, with Melbourne not far behind, at 6%. Wakelin explained why Sydney and Melbourne prices were impacted more.
“Property prices had overreached at the top of the cycle in Sydney and Melbourne, as values wandered into territory where potential buyers found them unaffordable,” he said.
Investor lending was also hit due to tighter lending regulations.
Another factor impacting the investor market was the Big 4 Banks, who tightened their lending criteria in response to scrutiny levelled at them during the Banking Royal Commission.
Wakelin said that in contrast, smaller cities like Canberra and Hobart saw increased performance, probably because investors interstate saw value in areas off the beaten track.
Wakelin believes that in 2019, cities big and small will converge.
“In 2019, I think we'll see a convergence in performance of our capital cities,” he said.
Aird said foreign demand for residential property could be used to forecast the rise and fall of property prices.
“From early 2012, demand for Australian property, particularly in Sydney and Melbourne, was augmented by foreign buyers,” he said.
“But over the past two years, foreign investment in Australian property has waned.”
Aird said stamp duty and tighter capital control has an impact on the decrease.
“This is primarily due to a lift in state government stamp duties levied to foreign investors as well as tighter capital controls out of China,” he said.
If Aird and Wakelin’s predictions are correct, we will see house prices converge to a more equal playing field, which will continue to make housing more affordable across the country.
Although it’s likely that the investor market will continue to remain tightened, this doesn’t mean it’s impossible to get your foot in the door.
If you’re open to thinking outside the box, and taking advantage of lower prices in smaller capitals, you may achieve success.
Overall, 2019 will be a good year for residential buyers, with housing prices predicted to decrease across the country.
It’s also a good time to consider refinancing, since interest rates continue to remain low for residential borrowers.
We always recommend you speak to a good mortgage broker, who will review your existing loan and provide alternative solutions that may save you more.
This is also the case if you’re looking for a loan. Talk to a good broker, and get them to compare different options that match your goals and circumstances.
Call now to get started.