We have now reached a consensus from Real Estate Agents, Economists and even the media. Property prices will not keep falling, but actually begin to make significant gains over the next 6 – 12 months.
The papers are now full of articles talking about the rise in property price over the next few years. This morning Channel Nine ran a segment telling us Brisbane house prices will be up by 20% by 2022. This report came from BIS Oxford Economics. Nothing spectacular here though as the long term average gain for Brisbane is around 6% for the 25 years to 2018. (compounding interest over 2.5 years at 6% would equal around 16%) Core Logic came out with its latest figures showing the median price of houses actually went up in Melbourne and Sydney in June.
The Reserve Bank have come out strongly with 2 interest rate cuts that will give anyone with a mortgage more money in their pockets and APRA have now relaxed their debt servicing calculator from 7.25%
Property prices tend to rise strongly on the back of sold turnover. We should see much greater turnover during the Spring selling season and the data collected and collated from this around December or January will most likely show significant increases in median house prices across most segments of Melbourne’s property markets. When we see this in the media January, the roll-on effect will most likely be that patient vendors who have been waiting for a turn in the market before selling, will most likely flood the market through the Autumn selling season of Feb, March and April.
I do not think the flood of properties in February and March 2020 will actually slow the growth of the median price. It will most likely, bring more buyers ack to the market place. The biggest issue facing buyers right now is not accessing finance, or being able to get a bargain, it is actually seeing enough good stock that they want to purchase. That will change with more vendors coming into the market place.
In essence, the median house price in Melbourne has most likely gone as low as it will go this time around. We should see small movements month in month through the 2nd half of this year with larger sharper increases early next year. There will be some bargains this year, and also some better properties selling at fair and reasonable prices for both buyer and sellers. Next year there should be solid turnover of good property and this will lead to a normalisation of the median house price growth back towards 9% next year.
The unit market is slightly different in Melbourne. This is still suffering from over supply and now the negative sentiment of bad workmanship in some high rise towers, the fire issues surrounding the cladding and also the rise of the short term stays and the disruptions they cause. I am not sure we will see the same growth in units as we do in house prices next year.
If anyone is considering buying a property in the next 12 months then now is a very good time to start your search. Please feel free to drop me a note or give me a call for a no obligation chat.
Ian James
Director
JPP Buyer Adovcates