The last two years have seen an overall downturn in Australian real estate prices, with Sydney (down 14.9%) and Melbourne (down 10%) seeing some of the most significant drops over the last two years as they have seen in recent history. But the downturn was not isolated to these two cities.
According to Business Insider Australia, Brisbane dropped 11% since reaching its high in 2016. Hitting its peak in 2014, Perth has since slipped 14%. And by July 2019, Darwin was 26% lower than its 2013 peak. Combined, it was a substantial reduction in property values across the country and the positive performers, such as Adelaide (up about 4% every year from 2013 to 2018), and Canberra (up 23% over the last five years), just weren’t strong enough to keep the country’s numbers in the black.
So, What Happened?
There were a number of factors contributing to the “soft landing” of the real estate market: APRA rules regulating banks, the Labour party’s plan to change capital gains taxes and negative gearing incentives (franking credits) and a lack of consumer confidence among them.
But, that all seems to be behind us now. With the election results, all-time low-interest rates and an easing of restrictions, the recovery is well on its way. The fact that many cities across Australia are witnessing population growth and a growing job market with low unemployment rates are building consumer confidence and swinging the pendulum toward a speedy recovery. And with the recent correction of housing prices, many Australians are entering the market - many for the first time - driving positive growth for the last four months in a row.
The recovery is sweeping through the Australian property climate at phenomenal speed, and many wise investors are looking to enter the housing market in this “buy low” period. There are opportunities waiting to be had. If you’re considering entering into property investment or need help with investment lending, contact the professionals at Acumen Finance. They are private/P2P loan specialists with access to a pool of sophisticated investors who want to help you help yourself.
So, where should you consider investing?
Sydney and Melbourne to Lead the Recovery
Sydney and Melbourne have been the hardest hit in the last two years. Not “out for the count”, they are also making the strongest comebacks - and at record speed. They are, by far, the hottest markets, true to their historical trends.
The Property Investment Professionals of Australia (PIPA)’s chairman, Peter Koulizos says there had “been a surge in buyer sentiment in recent months, with corresponding price increases in Sydney and Melbourne.” The organisation’s survey indicates that 82% of investors feel that now as an excellent time to buy. Further, they noted the optimism, fueled by activity from other buyers - particularly first-time buyers - indicates that the recovery is in full swing.
SQM's managing director Louis Christopher sees the rapid property increase in Sydney and Melbourne continuing into 2020, and believes that sometime before September, new records will be set in these two capital cities. Christopher goes further to predict that most “other capital cities are expected to have low to mid-single-digit price increases in 2020.” He also warns that the current boom will not likely match the one experienced in the five years to 2017, adding that Sydney and Melbourne are “still overvalued relative to economic conditions” by 21% and 27% respectively.
As you can see, predicting the future isn’t easy - even the experts don’t always agree. But one thing most of them do agree on is that the recovery is here: prices are at their lowest, but they’re starting to move upwards. So if you want to expand your portfolio into property investment, this is the climate in which to act. Need help getting started? Contact Acumen’s team of financial experts to see what type of loan you qualify for, and jump on the bandwagon before it’s too late.