2019 Property Market Outlook - January 2019
The first three to six months of 2019 will provide some of the best buying opportunities in many years. Property markets move in cycles – some years up, some years down and many years going sideways. If you are a home buyer, then you are in for a treat in 2019. Expats can also take advantage of the lower Australian dollar currently trading around USD 71 cents if they are thinking about buying a home.
Sydney’s median house price has already dropped back over 9.5% and Melbourne 5.8%. I expect both the leading capital cities to drop a little further but then stabilize and find a new floor. It is very difficult to predict the exact month we will hit the bottom of the market, but it will be in 2019.
The pace of price decline will slow the further we progress into the correctional phase. Markets tend to undershoot, or overshoot based on expectations. However, the property market is not just driven by sentiment.
It is driven by the fundaments of supply and demand, population growth, migration, interest rates, availability of credit, planning laws, and other economic factors.
My view is that we have already had the majority of the price drop and the first part of 2019 will present some of the BEST buying opportunities for both home buyers and investors to get a foothold in the market while there is less competition.
In times of uncertainty and tribulation, those that can hold their nerve and take action will do well. We have some headwinds that will slow the property market including:
- Federal election sometime in May or earlier
- NSW State Election in March
- Recommendations from banking Royal commission due February
- Potential short-term oversupply in some pockets
- Interest rate uncertainty
- Continued tight lending criteria
- Potential negative gearing and CGT discount changes
If you listen to all the commentators in the media, you could be fooled into thinking the market is crashing. It is not. Be careful who you listen to and listen to balanced arguments. There are indications that the bank lending policy will loosen in 2019. APRA have already removed the 30% growth cap on interest only loans, paving the way for banks to reprice and look to diversify the product offerings for investors. There is also a likelihood that Labor’s policy to ban negative gearing will be delayed till July 2020 or changed as the market has already cooled. Several economists are also suggesting that the next interest rate movement may be lower to help improve growth.
The key message is don’t panic. Property markets do fluctuate, and you can take advantage of these conditions if you are prepared with finance approvals and you’ve completed extensive market research.
Brisbane is a different story – I expect it to be one of the best performers in 2019 but it won’t reach double digit growth. It should achieve moderate positive growth. Continued affordability and interstate migration will help drive positive demand.
For investors there will be good pickings across several markets. My advice is pounce while the market pauses.
So how should you approach the market in 2019?
- With excitement and anticipation
- With eyes wide open looking for opportunities
- With careful due diligence
- With a pre-approval in place before you make any offers or bid on a property.
Here’s my top five tips for investors looking to expand their portfolio in 2019.
1. See a mortgage broker and get your finances in order with a pre-approval. Have some cash to put down as a deposit and move quickly. Maintain a buffer at all times.
2. Get a property with potential to add value – create your own capital growth.
3. Get in before the herd – next 3-6 months will present great buying opportunities.
4. Focus on the long-term picture – the property market will recover and come through this cycle into the next growth phase.
5. Get professional help – engage a buyers’ agent to help you – don’t be afraid to look outside your comfort zone and own backyard – there are plenty of opportunities around Australia.
To get your property plans on track for 2019, please call my team of buyers’ agents to discuss the best strategy for your personal situation. We only act for buyers and give tailored advice to help achieve your goals. Send us your property brief or call us on 1300 655 615 today. We’d love to help.