What’s happening in the Australian property market this year and what can we expect in 2019?
2018 has been a big year! We wanted to get a bird’s eye view of the key happenings that shaped the year that was, so we chatted to Tim Lawless, Executive Research Director Asia Pacific of CoreLogic, to hear his insights and see what’s on the cards for 2019.
1. One year passed since the national market downturn
Yes, this did happen, but don’t be too worried. “In October 2018 we saw the 12-month anniversary of the national market downturn, which means things have been tracking backwards for the past year now. Nationally, we have seen dwelling values fall 3.5% over the 12 month period – the largest decline we’ve seen since 2012.” But this isn’t cause for huge concern, advises Tim. “This is to be expected after a strong phase of growth. The five years leading up to that downturn, we were seeing consistent capital gains. For example, Sydney and Melbourne were up around 60-70% before the downturn.”
2. We saw a 10% decrease in sales volume
“The number of sales across the Australian housing market has fallen by about 10% in the past 12 months,” says Tim. Of course, this has a broader knock-on effect. “We see a reversal of the multiplier effect – consumers tend to spend less, state government’s receive less stamp duty, lenders write fewer mortgages, real estate agents take a hit to their commissions, there is less work for building and pest inspectors, conveyancers and removalists, just to name a few impacted industries. The impact of a market downturn is quite broad based.”
3. Mortgage rates are edging higher
“Mortgage rates are edging a little bit higher in response to higher funding costs from overseas. So, in September we saw the average variable mortgage rate rise by 10-15 basis points,” says Tim.
“In the historical context, mortgage rates are still as low as what they’ve been since the 1960s. So consumers and borrowers are still benefiting from very low mortgage rates that are helping to keep a floor under property prices.”
4. Regional markets are outperforming capitals
2018 saw a divergence between capital city markets and regional markets.
“During the growth phase, the capital cities were substantially outperforming the regional areas, now it’s the opposite,” says Tim. “Geelong and Ballarat, in Victoria, are substantially outperforming Melbourne. In New South Wales, there are areas like Wollongong and Newcastle outperforming Sydney. Lifestyle markets are generally seeing healthy demand and the mining regions look to be in the early phase of recovery.”
But how does this sit in the context of the market downturn? “We are seeing regional commissions slowing but nowhere near the same rate as capital city markets and some regional areas. These areas are popular due to a mixture of job growth and labour availability, coupled with housing affordability – these factors are a key driver of stronger conditions in those markets.”
5. Buyers are back in the driver’s seat!
Great news: “Buyers are much more empowered than they were in 2017,” says Tim. “We’re seeing stock levels now at the highest they’ve been since 2012, which means that buyers have a lot more choice and a lot less urgency to get into the marketplace.”
What’s on the cards for 2019?
“Though we’ll continue to see this gradual slowdown that we’ve been seeing throughout 2018, we can look forward to relatively soft housing market conditions with ongoing focus from lenders towards higher quality borrowers.”
Keen to take advantage of the market? Contact your Aussie Broker to see what your options are today.