The year 2010 has been a very interesting year to date. There was some excellent growth in the first part of 2010 but since then it has slowed. So what now?
By PETER KOULIZOS
According to RP Data, Australian capital city dwelling values didn’t grow at all over the June quarter and actually fell by 0.7 per cent in the month of June. Figures for each of the major capital cities for the June quarter are below.
Capital city - Growth in June quarter
Sydney + 0.5%
Melbourne + 0.2%
Brisbane – 1.3%
Perth – 2.5%
Adelaide + 1.1%
Canberra – 0.8%
Darwin – 0.1%
If you own property in Perth or Brisbane you might be worried but even in the best performing capital city, Adelaide, there’s nothing to write home about.
Some of you may start to panic but there’s no need to. This is all part of the normal property cycle.
Most capital cities had exceptional capital growth in 2009; a slowdown after this quick growth period is something to be expected. The slowing of the property market is set to continue for the remainder of the year. Let me explain why.
Firstly, most of our capital cities have experienced double-digit growth on a per annum basis since September 2008 (global financial crisis). Continuing at this rate is unsustainable.
Secondly, there’s a Federal Election almost upon us and the spending of money in all sorts of areas, including the purchase of property, slows significantly in the period leading up to an election. However, Saturday August 21 doesn’t mark the end of the election jitters for all of us. Victorians have a state election in November and the New South Wales state election is scheduled for early 2011.
With two of our most populous capital cities in state election mode, we can expect below average growth for at least the next six months.
Thirdly, winter time is not an active time for potential buyers of property so with less demand for property, prices soften.
In summary, this year has been an “up and down” year with a little bit more “down” to come. But look on the bright side. With the market in slow mode it could present some excellent buying opportunities. Added to this, interest rates probably won’t increase for the remainder of the year.
If you don’t own property, this is a very good time to get out there and buy. If you do own property, hold on and wait for the good times in 2011.
Peter Koulizos is a property educator at UniSA and TAFE and the author of The Property Professor’s Top Australian Suburbs – a guide to Australia’s top suburbs for property investors and homebuyers, available from www.businessmall.com.au
