The Top Australian Property Investment Trend’s for 2018
What to Expect & What to Keep an Eye Out For
Property Maven’s CEO and buyers agent Miriam Sandkuhler took some time to give her professional opinions on the trends in property investing in Australia for 2018. While she warns that she does not have a crystal ball she can say with certainty that what she is “forecasting won’t change unless there's an independent (or combination of) substantial adjustments to economic performance, employment, or interest rates escalating.”
The Main Factors of Supply & Demand
Growth in population and migration into Melbourne over the past 10 years has increased the demand for properties. While price growth slowed around Australia towards the end of last year, Melbourne has shown stronger immigration than Sydney. With the average of 100,000 new people coming into Melbourne over the recent years.
Victoria’s capital is sitting at 10% for growth over the past year making it the state’s leading market for property loans
Hobart had 11.5% growth
Clearance rates have come down in Melbourne and Sydney and there has been a slowdown in Chinese demand. While these cities have been the highest performers for several years, foreign buyers are reducing in numbers and as a result, those areas in Melbourne that have been thrashed (Mt Waverly, Blackburn, Box Hill, North Balwyn and Glen Waverley) are at risk of their furious run possibly being over.
However, there is still a big demand for housing and there may not be the supply to meet it. While a market slowdown could occur in the event of increases in unemployment, falls in migration to the state, or rate rises. It will more likely create a struggle for properties worth over $1.5 million in 2018.
So, what will be the driving forces and factors for 2018 property investing?
The $750,000 Price Bracket. The tight market in terms of supply means that the high demand will drive the market to surprising results. Also, houses in the $750,000 price bracket within 15 kilometres of the CBD will still perform strongly. This is driven by first time home buyers and cashed up baby boomers who are downsizing. A Grade properties in sought after locations will always draw a strong competition and achieve strong prices.
First Time Home Buyers & Upgraders. Critical market drivers are first home buyers and first-time upgraders. Which means the middle and outer ring suburbs where you can still buy for $1 million or less (especially houses) will continue to perform well due to demand from these buyers. This includes suburbs such as Preston and Sunshine that have more land and space for kids and schools. Within those suburbs, people will just accept the type of property they can get for their money: 2 bedroom houses, townhouses or villas.
Townhouses, Villas & Units. Townhouses, villas, and units will continue to be in strong demand. Especially those that have been built 10 to 12 years ago they are usually better quality than what is being built now. They have more space and bigger courtyards which is all appealing where people can’t afford to buy a house in a particular suburb, but they want proximity to the suburb.
Homes on Great Transport Routes and Train Lines. The combination of heavy migration into the city and the lack of good infrastructure make traffic a bit of a nightmare in and around Melbourne. Commuters want faster options and regional centres such as Geelong and Ballarat will benefit from the Vic Rail Line that commutes to Melbourne in an hour and a quarter. Also, watch for suburbs with level crossings removed as commuters can have their travel times cut as a result of these changes. This will spur interest resulting in potential price increases!
Avoid Small CBD Apartments. While townhouses and villas may still be performing strongly, on the flip side small CBD apartments that are 40 to 50 square meters or less will continue to struggle. Banks don’t like lending on them because they are difficult to resell. Miriam also warns that there are “problems with polyethylene cladding that are coming to light now. There's a lot of sub-standard and poorly applied cladding to the more recently developed buildings and it's highly likely that there will be class actions against builders and developers as a result.”
The Effects of Stamp Duty. Stamp Duty has become so horrendously expensive that most people are now considering staying in their current property and using the money they would have had to pay in stamp duty to renovate instead. This puts a stop to the flow of stock on the market. People are buying and holding instead of selling their property at $800, $900 or a million dollars and paying $50,000 in tax they can just stay where they are and renovate.
About Miriam Sandkuhler, Property Investment Advisor
Property Mavens Founder, Miriam Sandkuhler, is a Licensed Estate Agent, Accredited Property Investment Advisor - accredited by the Property Investment Association of Australia (PIAA) - Best Selling Author and an REIV award nominated Buyer Advocate.
With Diplomas in Property and Business Studies – in a non ASIC regulated industry, she’s uniquely qualified to develop and also fulfill successful and sustainable property investment strategies for her diverse range of clients - investors, SMSF trustees and home buyers alike.