Investor
Property market update
25-Sep-2018
“What’s the real estate market doing and where is the market going from here?” are the two most common questions we have had lately and despite the sensationalist approach by some of the media and in particular the 60 Minutes program its not as bad as they all make out.
I suppose bad news sells so that’s what they are giving us on the back of a downturn in prices over the last 12 months.
I read with interest an article by one of those experts that 60 Minutes interviewed, Louis Christopher from SQM Research, which I think shines a more detailed light on the subject. Click here to read the full article
Of particular note in this article he states
A housing crash in Sydney is unlikely for the following reasons:
• Our various government bodies have the capacity and the will to intervene if such a scenario were to become apparent. They can cut interest rates. They can introduce a first home owner grant. They can introduce quantitative easing. They can loosen recent regulatory requirements on the banking sector. There are precedents for all these actions.
• Leading indicators such as auction clearance rates, housing finance approvals, rental vacancy rates, credit growth rates, while not always perfect in their forecasting abilities, are suggesting this will be a correction that will be material but not calamitous. SQM Research continues to monitor these indicators closely for further deterioration.
• The economy is healthy and has shown itself to be somewhat resilient when past housing downturns have come and gone.
• Population growth rates are still very strong, if not excessive.
• The mining downturn has come to an end and the mining sector is now creating positive input into the economy.
• While it has become tougher to qualify for a home loans, the banks are still lending and conservatively competing for borrowers within the APRA boundaries set.”
So I’m inclined to agree we are not likely to see a crash but will lose some of the 40% plus gains made over the last few years which is a normal correction given we have seen 20% growth per annum in recent years when other capital cities in Australia have not seen this sort of growth
It has always been advisable to hold property investments for the long term and I think that is still the case. Timing, supply and demand are everything in any investment scenario so if you are thinking of selling in the next 12 months then now would most likely be a better time to sell. However if you are thinking of holding your property for the next 5-10 years then these things always sort themselves out and you should see good medium to long term gains for most property.
Watch our detailed market report below
Author - David Newton, Principal at Newton Real Estate
I suppose bad news sells so that’s what they are giving us on the back of a downturn in prices over the last 12 months.
I read with interest an article by one of those experts that 60 Minutes interviewed, Louis Christopher from SQM Research, which I think shines a more detailed light on the subject. Click here to read the full article
Of particular note in this article he states
A housing crash in Sydney is unlikely for the following reasons:
• Our various government bodies have the capacity and the will to intervene if such a scenario were to become apparent. They can cut interest rates. They can introduce a first home owner grant. They can introduce quantitative easing. They can loosen recent regulatory requirements on the banking sector. There are precedents for all these actions.
• Leading indicators such as auction clearance rates, housing finance approvals, rental vacancy rates, credit growth rates, while not always perfect in their forecasting abilities, are suggesting this will be a correction that will be material but not calamitous. SQM Research continues to monitor these indicators closely for further deterioration.
• The economy is healthy and has shown itself to be somewhat resilient when past housing downturns have come and gone.
• Population growth rates are still very strong, if not excessive.
• The mining downturn has come to an end and the mining sector is now creating positive input into the economy.
• While it has become tougher to qualify for a home loans, the banks are still lending and conservatively competing for borrowers within the APRA boundaries set.”
So I’m inclined to agree we are not likely to see a crash but will lose some of the 40% plus gains made over the last few years which is a normal correction given we have seen 20% growth per annum in recent years when other capital cities in Australia have not seen this sort of growth
It has always been advisable to hold property investments for the long term and I think that is still the case. Timing, supply and demand are everything in any investment scenario so if you are thinking of selling in the next 12 months then now would most likely be a better time to sell. However if you are thinking of holding your property for the next 5-10 years then these things always sort themselves out and you should see good medium to long term gains for most property.
Watch our detailed market report below
Author - David Newton, Principal at Newton Real Estate