2019 Property Outlook - Deciphering Facts From The Fake News
If you believed everything you read in the media nowadays about the Australian property market, you may feel a little deflated right now... or perhaps just outright terrified. Many reports indicate that we’re heading into a downward spiral and investors and aspiring homeowners should be shaking in their boots.
But I am here to bring you some good news. Like anything, we can’t believe everything we read online or in the newspaper. Thankfully, the Australian property market in 2019 won’t be as bleak as anticipated.
It’s no surprise that many investors were happy to see the end of 2018. It was a year of uncertainty and instability across most of Australia’s property markets, with plenty of doom and gloom forecast by property commentators.
Several factors impacted house prices nation-wide with one of the most significant and far-reaching being the Royal Commission into Banking. The Royal Commission has lead to tighter lending policies, effectively reducing borrowing capacities. Last year we also saw an oversupply of housing and a general weakening sentiment towards property which also contributed to falling property values.
While it’s inevitable that the property market will continue to fluctuate and falling house prices may occur in certain areas, early 2019 is expected to see conditions ease and enter a phase of moderate growth by the second half of the year.
When Sydney’s property market weakens, as it did in 2018, the media tends to magnify this and declare it a nation-wide epidemic which is not entirely the case. While Sydney house prices dropped by around five to 10 per cent in 2018, the median house price nationally dropped by a mere one to two per cent.
While property price falls experienced in Sydney and Melbourne over the past two years have been the largest in decades, this only came after a period of extreme and unanticipated growth which is unlikely to be repeated soon. It’s expected that house prices in Sydney and Melbourne will continue to fall slightly this year, yet these property markets will eventually pick up in 2020.
Meanwhile, there are good investment opportunities in other states. Inner-city Brisbane will counter Melbourne and Sydney’s downturn with prices expected to rise by four per cent in 2019. Perth is also expected to grow faster than most other markets this year with a growth forecast of 5 per cent.
Adelaide has experienced modest growth over the past few years and in 2019 and 2020 house price are set to increase by a further two per cent. Hobart and Canberra will also continue to show increases in property prices throughout 2019 both nearing a rise of two per cent.
Australia remains in the Top 5 fastest growing countries in the world which is positive for the housing market. A growing population brings a need for housing, leading to a more competitive market. At this point in time, our national unemployment rate is down, the economy is running smoothly, interest rates are low, and wages growth is slowly picking up.
The likely change of Federal Government from Liberal to Labor expected in May, may not be as detrimental to investors and property owners as anticipated. The grandfathering provisions in Labor's negative gearing and capital gains plans may boost the property market in the months leading up to the election. It is possible that many investors will secure properties before the policy is introduced, which could, in fact, cause prices to stabilise.
The best thing we can do for property prices is not panic. Australia really is the lucky country and there will always be a bounty of great opportunities for property investors, but it is critical to follow market cycles and track economic forecasts.
The years of phenomenal growth are behind us now and it’s important to ignore the negative news and focus on areas with forecasts showing property prices increasing. 2019 is set to be a year of greater stability for both property owners and investors, so it’s time for us all to calm down, take a deep breath, and just ride the wave.