A rebounding property market; where fortunes are made – and lost.
After a couple of years in the doldrums, property once again is on everybody’s lips.
Months of solid results confirm a rebound is on and what I can tell you after working in property for more than 20 years is that it’s the start of the upcycle when fortunes are made by people who make the right moves.
July 2019 was the market’s low point. That’s when falling interest rates, an easing of bank lending criteria and the end of election uncertainties combined to turn market momentum around.
That momentum carried into 2020, with good results from January auctions and the summer beach-house market; strong signals for the year ahead. If this rebound follows the historic pattern, we’re looking at four years of growth.
If you’re someone with an eye to making money in property, what are the best plays and what are the trends to keep an eye on?
First time buyers active now.
For first time investors, now is a really good time to get into the market.
Some of the best opportunities we are finding are in Ballarat and Geelong, regional cities with an affordable entry point and strong fundamentals thanks to their solid local economies and fast rail access to Melbourne.
We have been snapping up property in these cities over the last two years, and for investors with a limited budget, they are ideal.
But be careful, they are quite different to capital city markets and you’ll need to be closely advised to buy well.
Mature couples key to listings.
A group we will see a lot more of is downsizers; mature couples with valuable homes in middle-ring suburbs wanting to cash in and settle closer to town.
Many of these couples have been sitting on their hands during the down cycle but are now more confident about putting their home up for sale compared to a year ago.
That means we could finally see an end to the stock shortage in premium grade family homes in the leafy, affluent suburbs.
For savvy, well-advised buyers a sweet spot is approaching where there is great long-term buying for carefully selected homes.
For couples looking to sell it is a promising time, but it’s probably a good idea to for them to engage a vendor’s advocate. There are some very hungry agents out there and it’s worth having someone with experience on their side to ensure they get the best outcome.
Upgraders driving some suburbs.
The final and perhaps the most influential group of all is upgraders.
Typically, these are second time buyers, selling inner suburban units and buying a family house in middle or outer ring suburbs.
Upgraders are stirring as revealed recently when REA Group published search activity for different buyer types on their site. The results showed where upgraders were looking to buy; Sydney’s Baulkham Hills was the most popular, but the next 9 top slots were filled by suburbs in Melbourne’s East.
Typically, upgraders looking for a home to house a growing family also have an eye to the long-term prosperity a well-chosen property can bring.
For these couples, it is well worth having an experienced adviser to guide them in selecting a property with better long-term potential and no hidden traps.
What does that all mean for the market?
When we build a complete picture of where the market is going, it looks something like this.
First, absent a “black swan” type crisis, the property market has a strong year ahead of it and quite probably another two or three years after that.
Sydney’s market has been leading to date, but interestingly, when you look back over the last decade, Melbourne property is the best performer. I expect this to pattern to re-establish itself in the 2020s.
There will be some change in shorter term trends over the next year. For instance, we will probably see first homebuyer numbers start falling and buyers from Hong Kong continue increasing.
We might also see the federal government step in with some small measures to curb house price growth.
But the big picture is very good for the property market overall. Yet strangely enough, in fast growing markets you need to be wiser as small mistakes can grow in importance faster.
Miriam Sandkuhler is the CEO of Property Mavens a multi-award-winning advice firm. She is a bestselling author and appears regularly as an expert commentator in the national media.
Advisers can contact Miriam directly for an obligation free, partner consultation.
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