Analysing Current Conditions in the Property Market
2019 has an interesting year for the property market. The ongoing effects of the market downturn have weakened prices and dampened confidence. However, several factors, including historic low interest rates, improved sentiment and subtle signs of recovery, indicate improvement could be on the horizon.
To get a clearer picture of what’s really going on, it’s time to analyse the current state of the market and identify potential impacts and opportunities for you and your property portfolio.
CoreLogic has crunched the numbers across the nation and in the capital city markets to get a feel for current conditions. They’ve identified a more “subtle” rate of decline in prices in recent months, influenced by slowing falls in value across Sydney and Melbourne. This is good news for property investors, possibly heralding long awaited stabilisation in the market.
More importantly, CoreLogic’s research has revealed an ‘organic’ improvement in market conditions began before the positive boost in sentiment following the federal election and the first of the interest rate cuts. This provides hope that real recovery could be on its way.
An analysis of current conditions indicates that historically low interest rates, coupled with improving sentiment, are already having a positive effect on housing market conditions across the board. While it’s still a weak housing market, there are positive signs that recovery could be around the corner.
The news is finally looking better for Sydney. Dwelling values recorded a small but positive movement in June, rising by 0.1%. This is the first increase in dwelling values since the market peaked back in 2017. Although small, this increase has reduced the annual rate of decline to under 10%, pointing to possible signs of market stabilisation.
In another positive sign, auction clearance rates continue to rise, coming in at over 60% in June. While the number of properties going to auction is much lower than at the market peak, this is still an encouraging sign, indicating a better fit between buyer and seller expectations.
It also appears the decline in the number of property sales is bottoming out. Based on estimates of settled sales, activity in the June quarter is roughly in line with previous troughs recorded over the past two market corrections, indicating a turning point lies ahead.
These signs indicate that the market is now ripe for astute investors. With established apartments across Sydney offering great value right now, it’s an ideal time for investors to take action before the market begins to rise again.
Newcastle hasn’t experienced the same dramatic fall in prices seen in Sydney, but subdued dwelling values point to market correction after the heady highs of 2017. Softer prices have made desirable suburbs, such as Adamstown, Kotara and New Lambton, more affordable for buyers and investors, with quality properties selling more quickly than their counterparts.
While buyer numbers are down, well-priced and well-located properties are still selling despite talk of declining prices. In fact, record prices have been recorded this year in Adamstown Heights ($2.15 million), Hamilton ($2.25 million – second highest recorded sale) and Fletcher, which recorded its first million dollar sale in June ($1.01 million).
Property prices are likely to stabilise in Australia’s capital cities by the end of the year and will then show moderate growth in 2020. As Newcastle’s market tends to follow the lead of the capital cities, investors can expect a similar timeline for Newcastle’s market recovery, with stabilisation expected early 2020 and moderate growth to follow.
While the property market across the board is still weak, there are signs of recovery ahead in all markets, including Sydney and Newcastle. Given the best time to buy into the market is at the bottom of the property cycle, investors should take advantage of the opportunity to add to their portfolios, while buyer interest and prices are still low.
Now is the time for astute property owners and investors to re-enter the property market, to position yourselves to take full advantage of rising values and prices over the coming year. Current conditions in the property market all point to stabilisation and recovery ahead. Get ahead of the market and make the most of the opportunities available right now.
Looking to make the most of the current conditions in the property market? Vision Property & Finance has the knowledge and experience to help property owners and investors take advantage of improving market conditions. Call 02 8354 3000 to contact our Sydney office or 02 4014 1999 to talk to someone in our Newcastle office. You can also contact us here.
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