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Australia’s property price surge set to take a breather in 2017

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HOUSE price growth is set to slow nationally this year as low inflation, weak wages growth and oversupply worries in some cities put the brakes on recent rises.

And the popular claim that home prices double every 10 years has become a myth, as a News Corp Australia analysis shows that only Sydney delivered on that promise in the past decade and forecasters say no city will grow this much in the coming 10 years.

From 10 per cent-plus growth in 2016, most independent forecasters expect home prices to rise about 5 per cent nationally as the likelihood of another Reserve Bank interest rate cut diminishes and hot markets in Sydney and Melbourne start to cool.

“We are expecting slower growth, in the region of three to five per cent,” said CommSec chief economist Craig James.

“However, we had underestimated the demand that was out there in 2016. The Sydney market still remains quite buoyant,” he said.

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Each city has its own property price cycle and different supply and demand issues. Sydney and Melbourne have boomed, Perth and Darwin dropped as the mining boom petered out, while other cities have been relatively flat.

“It’s basically been Sydney and Melbourne then daylight comes next,” Mr James said.

An analysis of Real Estate Institute of Australia data shows that Sydney’s house prices have surged exactly 100 per cent in the past decade, while its unit prices rose 95 per cent.

No other capital city saw prices double in the decade — Melbourne houses were next best (up 94 per cent), Darwin 57 per cent, Adelaide 51 per cent, Canberra 51 per cent, Brisbane 45 per cent, and Perth and Hobart 23 per cent.

Mr James said increasing supply — particularly in apartments in Sydney, Brisbane and Melbourne- should slow down price growth. “Across the country a lot of new buildings have been approved and are under construction. When wages are growing at 2.5 per cent it’s hard to sustain growth in home prices at these levels.”

Metropole Property Strategists CEO Michael Yardney said property markets would be fragmented in 2017 depending on local economic strength and supply and demand, with two-thirds of full time jobs likely to be created in Melbourne and Sydney to underpin continued outperformance there.

“The elephant in the room is the huge oversupply of new apartments being completed in Brisbane and Melbourne,” he said.

Most areas of Australia were unlikely to double in price over the next 10 years, Mr Yardney said.

“We’re now at a time of lower inflation, lower interest rates, lower economic growth and lower wages growth, so it’s likely we’ll have lower capital growth of property in the next decade,” he said.

However, some suburbs would outperform. “In the last five-year Census period, while overall wages growth in Australia was 20 per cent, some municipalities had 40 per cent wages growth. In general these were the gentrifying inner and middle ring suburbs where affluent owner occupiers with higher disposable income wanted to live and could afford to pay for the privilege of living there.”

 

 

Originally Published: http://www.goldcoastbulletin.com.au/

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Opinion

Queensland is the next property hotspot, experts say

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Queensland is the next property hotspot, experts say

As New South Wales and Victoria continue to experience weakness. Queensland is expected to take the lead, a National Australia Bank (NAB) poll of property professionals revealed.

According to the survey, industry experts project house prices in Queensland to increase by 0.7% next year and 1.3% in two years.

Some areas seen to perform strongly over the next year include Brisbane, Cairns, the Gold Coast, and the Sunshine Coast. Out of the suburbs, Coomera and New Farm are expected to realize robust gains.

Meanwhile, Queensland’s rental market is also poised to enjoy an upward boost, growing by 1.3% next year and 1.9% in two years. This is despite the stricter rules on housing investment.

The respondents of the survey also expect Queensland to retain foreign buyer interest. In fact, the share of foreign sales hit a four-year high of 22.8% over the previous quarter.

The results of the survey go against NAB’s own projection of the market. For instance, the bank expects house prices to remain flat in Brisbane over the next three years. Unit prices, on the other hand, is seen to fall by 4.5% over the next year.

NAB chief economist Alan Oster said Brisbane’s housing market seemed to be going sideways and its unit market still creates concern.

“It hasn’t peaked yet, so that’s good. We’re seeing quite strong economic activity in Queensland, so that always helps,” Oster said, as quoted by The Courier-Mail.

Source: brisbaneinvestor.com.au

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Opinion

Gold Coast house values record the biggest growth in Queensland

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Gold Coast house values record the biggest growth in Queensland

The Gold Coast has recorded the strongest growth in house prices in Queensland over the past 12 months.

GOLD Coast house prices are leading the way in Queensland, up six per cent in the past 12 months to an average $620,000.

The latest figures by the Real Estate Institute of Queensland show homes on the Glitter Strip are $35,000 more on the same time last year.

Unit prices are up 1.9 per cent to $428,000.

Gold Coast house values record the biggest growth in Queensland
REIQ data reveals houses on the Glitter Strip are worth $35,000 on the same time last year.

REIQ’s Queensland Market Monitor for March said the strong population growth came on the back of infrastructure projects such as the $550 million Gold Coast Health and Knowledge Precinct and M1 upgrades.

“The property market has been one of the big winners from the sporting event as the $1.5 billion infrastructure investment has boosted confidence and demand for housing in the region,” the report stated.

“We expect house prices will show an upward path in 2018. However, this growth will most likely be more moderate.”

A quiet real estate period leading up to, and during, the Commonwealth Games likely contributed to a slight drop (-0.3 per cent) in the March quarterly median sales price, the report reveals.

Gold Coast house values record the biggest growth in Queensland
Andrew Henderson says a growing population and employment opportunities were contributing to a strong property market. Picture: Jerad Williams

REIQ Gold Coast zone chairman Andrew Henderson said he expected interstate migration to continue to benefit the city.

“I expect the market to remain strong,” he said.

“There is a heavy amount of interstate buyers moving here.

“I was at an auction recently where the winning bidder was from Sydney and the underbidder was from Melbourne.”

Mr Henderson said growing employment opportunities were also attracting homebuyers to the city.

Gold Coast house values record the biggest growth in Queensland
The Gold Coast property market is expected to remain strong.

“We have some of the best health facilities in the country and our universities are world recognised.

“Those two things alone complement the tourism industry and the lifestyle aspects that the Coast offers.”

The report found the fastest-selling suburbs on the Coast included Worongary, Merrimac, Highland Park, Mudgeeraba and Carrara.

It also revealed the rental vacancy held tight throughout the first quarter of the year at 1.1 per cent.

Gold Coast house values record the biggest growth in Queensland
Andrew Bell says the Coast had evolved from a tourist town into a vibrant city with an expanding economy. Picture Mike Batterham

Ray White Surfers Paradise Group CEO Andrew Bell said the Games heralded the next chapter for the Coast, as it evolved from a tourist town into a vibrant city with an expanding economy.

“The city’s property market is riding the irreversible momentum that has now come to the Gold Coast in terms of economic diversity and with more employment options we will need more housing options for people,” Mr Bell said.

“We are no longer going to be subject to tourism upsides and downsides as we were in the past because our economy has well and truly diversified beyond just tourism.”

Source: brisbaneinvestor.com.au

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Opinion

Australia’s golden triangle of opportunity

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Australia's golden triangle of opportunity

It was great to be back on the Gold Coast for the 21st annual Australasian Real Estate Conference (AREC), attended by over 4,000 of Australia’s best industry professionals.  While I was there I was once again reminded of how much potential the South-East Queensland property market is offering both sea changers and investors at this stage in its market cycle.

In my view, Brisbane is the best market in Australia currently for short to medium term price growth, with the value gap between it and the other big East Coast capitals as large as I’ve seen it in many years.

When you factor in the key drivers for future growth – liveability, affordability, scale and future economic prospects, they all suggest that Brisbane is a market to invest in.  Check out the latest statistics from CoreLogic below.

Value gap – median house prices 

Brisbane $536,286

Melbourne $821,006

Sydney $1,019,093

Value gap – median apartment prices

Brisbane $385,121

Melbourne $573,673

Sydney $749,765

I’ve been bullish on Brisbane for many years and in hindsight, I called its next growth phase a couple of years too early. It’s had some growth in recent years but there is a lot more to come over the next few years.

According to McGrath’s top prestige agent in Brisbane, Alex Jordan, one of the dominant trends today is downsizers buying up luxury apartments.

Alex says: “Despite the reported oversupply in Brisbane’s inner city apartment market, we are seeing great strength in the prestige apartment sector.

“The luxury apartment market ($1M+) is driven by owner occupiers, particularly baby boomers and empty nesters, who are attracted to less maintenance and better accessibility.

“Popular suburbs include New Farm, Newstead, Teneriffe, Kangaroo Point, South Brisbane, St Lucia, Paddington and the Brisbane CBD. These areas offer a desirable lifestyle with an abundance of shopping, dining and entertaining precincts at their doorstep.”

South East Queensland has so many options for asset-rich, cash-poor southerners. Many of our customers in Sydney and Melbourne are looking closely at South East Queensland both for investment and a potential sea change. I believe its affordability will continue to attract record levels of interstate migration.

If you live in Sydney or Melbourne and you’re struggling with the mortgage and cost of living, Brisbane is a fantastic alternative. It offers big city job opportunities, high quality education options and the chance to transform your financial future.

The boom delivered Sydney and Melbourne home owners a capital gain of up to 75% – that’s enormous new equity that could be cashed in to fund an amazing new lifestyle with far less mortgage stress up north. Plus, you’d be buying in just before Brisbane’s next wave of price growth. It’s the perfect scenario.

I believe the area from the Gold Coast to Toowoomba and up to the Sunshine Coast is Australia’s golden triangle right now.

Toowoomba, with its expanded airport facilities which have opened up easy access to the south, is the perfect and affordable treechange destination. Known as Queensland’s Garden City, about 2,300 people moved here from Brisbane last year for its cheaper house prices and enjoyable regional city lifestyle.

Both the Gold Coast and Sunshine Coast are also appealing sea change options benefitting from a raft of new infrastructure that will drive further population growth and generate more local jobs.

Brisbane is one of the world’s great cities but I don’t think this is fully realised as yet. If you haven’t been to Brisbane for a number of years, get on a plane. This is a thriving city that offers many of the lifestyle amenities you love about the southern capitals but at a much cheaper price.

I think Brisbane will also become very attractive to migration and investment from Asia in the years ahead.

South East Queensland is offering opportunity everywhere for both owner occupiers and investors alike. Now’s the time to consider what Australia’s premier lifestyle market can do for you!

Source: brisbaneinvestor.com.au

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