The new year has just begun, and it’s looking like Australia’s property bubble has, if not burst, then started to deflate at a rapid pace, at least in some parts of the country.
The decline in Melbourne and Sydney prices has been significant in the last year, speeding up to drops of over 4 per cent in both cities in the last three months alone. AMP Capital predicted in December that a further drop of up to 10 per cent is possible this year, which may prompt the Reserve Bank to cut interest rates.
Housing researcher SQM also posits that the looming Federal Election, with Labor proposing to change negative gearing if it wins government, may also be depressing the market in those two cities.
The news isn’t all bad if you look further afield than those two major cities. Hobart and Canberra are improving and there’s growth potential expected in the south east Queensland market, as discussed here last week.
Falling housing prices are not necessarily welcome to people who purchased when prices were high, but there’s always a flipside.
Back in May 2017, the Australian National University (ANU) surveyed Australians on their attitudes to property. The poll showed 75 per cent of Australians felt that owning their own home was an essential part of the Australian way of life – while at the same time around 70 per cent of us were concerned about their ability to ever become homeowners.
That same survey indicated almost all respondents felt housing prices would either stay the same or, more likely, keep increasing.
It’s taken 18 months for that to turn around, and while it’s not fabulous news for existing investors, it may be a time for some careful, clever thinking. Opportunities exist to enter the property market in the right location – in regional areas and in capitals outside NSW and Victoria, for instance.
Looking for the silver lining, 2019 may be the year some people become home owners and property investors for the first time.
If you are thinking of buying or selling property or you are unsure of how well your property portfolio is positioned in the current changing market, contact United Global Capital today on 03 8657 7640 or email [email protected] for a no cost, no obligation consultation and learn how you can position yourself for success.