There is a great deal of talk at the moment about whether now is a good time to buy or sell. Australia's real estate market has picked up in a number of areas over the first half of the year, which has led many spectators to question whether we have a full recovery underway. This is a difficult question to answer in light of the many complex variables that can impact the property market at any point in time. However, to provide some insight into the state of the market at present, we have decided to share the following article by Century 21 Australasia's Chairman and Owner, Charles Tarbey, which is being featured in the July edition of Century 21's 'Property Investor'. We hope you find this an informative read.
The outlook for Australia's property market
It has become relatively clear over the course of 2013 that each of Australia's capital cities is in a different position with respect to property prices. RP Data-Rismark's Home Value Index has shown differing house price growth between capital city markets over the first six months of the year, and many investors are likely wondering how much their properties will be worth come the start of 2014.
I believe that there is still a tremendous amount of buyer interest in the right locations within the right cities, and this is a critical factor that has, and should continue to, support buyer activity within certain markets.
There are many strong buying opportunities in discretionary spending areas where prices haven't quite moved yet, and these prices generally won't move until the wave kicks out from the capital cities.
There are also some prime buying opportunities at the top end of the market where property prices are generally heavily influenced by economic conditions and the success of high-net-worth individuals.
The low to mid range of the marketplace (up to $2.5 million) is also proving to be incredibly active in the right cities – these being Sydney, Melbourne and Perth.
The other capital cities appear to still be finding their feet. Adelaide, in particular, continues to have stock levels that could support projected immigration and population growth – one of the few capital cities in this position.
Melbourne is currently experiencing a few minor oversupply issues following several major land releases and a glut of apartments that have come onto the market. This is only occurring in pockets of Melbourne, however, which means the market's overall price growth shouldn't be impacted too heavily.
My belief is that any well-located area within a city should experience some price growth this year. Price growth will likely come down to marketplaces as opposed to cities in general.
As I've already mentioned, there is a great deal of interest from buyers at the moment. The availability of high quality investment product – in the right areas – appears to be the biggest issue. Stock levels have been trending upwards over the past few weeks, but supply remains substantially down on a year-on-year basis.
Traditionally, you would not see a winter market have an increase in stock at this time of year. However, in recent times, the seasons of real estate have effectively disappeared; the marketplace is now more subject to consumer sentiment, interest rates and economic data. Agents will generally advise against selling until springtime, however, if the right type of stock hits the market, it will likely sell regardless of the season.
Some would-be buyers may also be sitting on the sidelines due to negative talk regarding the Australian economy. I would caution investors to remember that there has been negative sentiment around the domestic economy for some time now – particularly from the media. And yet, our economy has not collapsed and we have not seen a housing bubble burst.
There are likely investors out there who held off on purchasing a property six months or a year ago, but that are now looking to make offers in a much weaker supply environment. I would say that if the economic outlook is poor at present, it's very strong in comparison to where it has been.
For now, the focus for prospective purchasers should be on finding the right properties in the right areas. Interest rates are at 53-year lows, buyer interest is relatively high, but subdued consumer confidence is continuing to keep many buyers out of the market.
For those investors that are willing to act sooner rather than later, there could be an opportunity to make some very strong investments – provided they can locate good quality investment product in the right areas.
For more information about the residential property market in your areas of interest, please feel free to stop by your local Century 21 Real Estate office for expert and clear advice.