Winter is coming, Australia. The days might get shorter and a lot cooler, but competition for property will be a little hotter than usual over the coming winter months.
So if you’re looking to upgrade on your current property, invest in some real estate or get the keys to your very first home, there are a few things you should know about your property market first.
To start with, you might have heard that the Reserve Bank of Australia kept the official cash rate on hold for the 19th consecutive month at its most recent May meeting which means that official interest rates will continue to stay at historically low levels for a little while longer, inviting hopeful homeowners to get into the market while they can.
Mozo recently released its home loan rates report revealing that even though the RBA hasn’t moved rates for 21 months, many lenders had increased their rates in that time.
So if you’re in the market for a new home loan, don’t settle for an interest rate in excess of 3.70% as this is now the benchmark rate for a home loan. Half of all the lenders in our database now offer mortgages below this, so be prepared to haggle with your lender.
There’s also the small matter of the Australian Prudential Regulation Authority (APRA) announcing it will scrap investor loan growth regulations on home loan lenders in July which could see a flock of new investors grab their parkas and scarves and head out to auctions and open houses over winter.
But most importantly, you need to know exactly what is going on in the specific market you’re looking to buy into – are property prices growing, or sliding? Is it an investor-centric market, or first home buyer friendly?
So before you begin hunting down the perfect house, apartment or parcel of land, find out what’s happening in your market with my winter property forecast for each of the capital cities, below.
It’s no real secret that Sydney’s property market has been sliding after unbelievable growth rates over the past few years. It has always been a very investor-centric market, so I think that the recent changes to APRA’s investor lending regulations will help prop up prices and slow that decline to about 1%.
This might not be the best news for first home buyers, however. Traditionally, less properties are listed throughout winter and with the more investors potentially returning to the market, there will be increased competition if you’re trying to secure your first home in Sydney.
Clearance rates have certainly dropped off over the first few months of the year in Melbourne and prices have been sliding there too, even if not at the same rates as in Sydney.
But, I am forecasting a bit of a kickback and for the market to grow by 2% this winter. Why? Well, Melbourne has a strong first home buyer market with price points that are more affordable than Sydney but investors will also be able to get into the market now that they have increased access to affordable lending.
It will be a strong winter in Brisbane’s housing market and I think we will see house prices grow by as much as 3% over the next three months. Increased first home buyer activity will be the driving force, especially in suburbs that are within a seven or eight kilometre radius of the CBD.
Brisbane also presents an opportunity for interstate investors who see it as a more affordable alternative to Sydney or Melbourne. In saying that, Brisbane is suffering from an oversupply of apartments right now so I expect those prices to continue their downward trend until demand catches up.
Adelaide is the steady eddy of Australia’s capital cities with gradual growth year-on-year, but there is a lot happening there right now which will fuel a 2% uptick in the market over winter.
A new $150 million shopping centre is currently under construction in Salisbury South and there are even more employment opportunities thanks to a recently awarded $700 million government naval contract, which will drive genuine home buyer activity.
But it’s always been a cost-effective, low-risk market to invest in as well, so expect investor activity to continue to fuel property market growth in Adelaide over the winter period.
Property prices in Perth have definitely suffered over the past few years but this could be the quarter they start to see a little bit of growth, finally. I think that owner occupiers will start to get out to auctions more over the next few months and this will fuel a bump in clearance rates which will result in an overall growth of around 1%.
Hobart has been the top performing capital city over the past twelve months and I’ve previously predicted a mammoth 12% growth over the entire year. In the winter months though, I’m tipping a 3.5% increase in property prices due to a tight rental market that is continuing to accelerate prices.
All-in-all, there will be more good news in Hobart and it will continue to be Australia’s standout city.
Canberra is another solidly performing property market at the moment thanks largely to the ongoing opportunities for work, particularly with Government contract jobs.
Similarly to Hobart, there are super low vacancy rates in the rental market right now which is pushing prices up and I think they’ll continue on their upward trajectory throughout winter with a 2-2.5% growth.
Steve Jovcevski is Mozo’s home loan and property expert. With an extensive knowledge of home loan products and property trends, Steve is full of practical tips to help first homebuyers, refinancers or investors build and get the most out of their property portfolio.
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