Home prices have come off the boil in many areas – we look at what it means for buyers and where the market is heading.
What interesting times we live in. The Reserve Bank’s official cash rate has remained on hold for an extended period, the home loan market is highly competitive, and to cap it off, property price growth is cooling is many parts of the country with home values nationally slipping 0.1% in February 2018.
It’s a combination that spells “opportunity” for Australians hoping to achieve their property dreams in 2018, be it buying a first home, investment property or upgrading to a better home.
But have prices plateaued? To find out, let’s take a closer look at what’s happening around the nation. Australia is made up of micro-markets, and it’s important to know what’s happening in your patch – or any market you’re thinking of buying in.
Across the Sunshine State market conditions vary widely. Property values in Brisbane are down 0.1% over the last quarter. However, the city is enjoying the third fastest population growth across Australia (Sydney and Melbourne top the league table), and backed by strong interstate migration into south-east Queensland, this bodes well for future property price growth.
Looking at the regions, Queensland reflects something of a broader trend, with a number of regional markets outperforming state capitals.
Figures from CoreLogic show Townsville is the only region where values have dropped for both houses (down 2.1%) and units over the past year.
The Gold Coast and Sunshine Coast markets have both seen rising house and unit values, while in the Wide Bay area and Cairns, house prices are on the rise, with unit prices heading south.
New South Wales
In Sydney, property values dipped 2.4% in the last quarter and 0.6% in February. This is great news for first home buyers, and we’re certainly seeing an increase in first time buyer numbers since the low point of June 2017.
Regionally, a number of non-metropolitan areas are forging ahead. In Newcastle and Lake Macquarie, where homes are far more affordable than Sydney, values have climbed 12.9% over the last year. Similarly, to the south of Sydney, unit prices in the Illawarra are up 12.8%.
Canberra has experienced modest house price growth of 3.2% over the past year though values fell by 0.2% in the last quarter.
The median property price in the ACT sits at $589,000 so it’s still more affordable than Sydney or Melbourne. And Canberra has the lowest unemployment rate across all states and territories – currently less than 4.0% compared to 5.5% nationally, which will help to support home values looking ahead.
In Melbourne the property market is cooling, with values down 0.4% over the quarter. That said, the city has notched up gains of 6.9% over the past year, so home owners should have enjoyed gains in equity growth over the period. Melbourne is a key beneficiary of population growth, with this city’s population expected to reach five million by June 2018, and the influx of new residents is likely to fuel demand for housing.
As in other states, across Victoria a number of regional markets are enjoying big gains. Geelong, property values have climbed by up to 14.6% over the past year, while the Latrobe-Gippsland region saw house price gains of 5.1%.
Tasmania, or more particularly Hobart, continues to hold the title of Australia’s most affordable state for property – but only just. The median home price in Hobart is now $416,840, and it’s possible the city could eclipse Darwin home values (where the median value is $426,421).
In fact, with price growth of 13.1% over the past year, Hobart can claim to have the most buoyant capital city market across Australia.
The good news extends to regional Tasmania where values grew 5.5% over the past year.
Supported by significant interest from interstate investors, Tassie’s property market could have some upside to run.
There’s a lot to love about the South Australian market – it’s a ‘steady as she goes’ kind of place, where property values rose 2.2% over the past year, and remained stable over the last quarter.
While Adelaide’s median house price is $460,000, apartments offer exceptional value with a median price of $332,000, the cheapest across Australia’s state capitals.
Perth itself has seen home values decline by 0.7% over the quarter though this slowed to 0.2% in February so it may be that the Perth market is at, or approaching, the low point of the property cycle.
Outside of Perth, prospects could be good for the south-western region of Bussellton, where limited housing supply combines is backed by the dual attractions of accessibility to both the beach and the Perth CBD.
Property values in Darwin have dropped 7.4% in the last year, and the 0.9% fall in values in February was the largest across Australia’s state capitals.
There’s no way to sugar coat the situation however the city’s median home price of $426,000 is now a lot more affordable than in the past. It could make 2018 the year for Darwinites or interstate investors to pick up a bargain, especially those with a long range view. Darwin has what it takes to support long term property growth – a spectacular waterfront, deep water port and critically, it is a key link to the global powerhouse of Asia.
The bottom line
Low interest rates, a competitive lending environment and home prices that have come off the boil are the key characteristics shaping today’s property market.
Talk to your Aussie broker to see how you can take advantage of these conditions to achieve your property goals.
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