What should you expect from the property market in 2016?
It might be hard to believe, but there's no denying it – 2016 is here. 2015 was another bumper year for the Australian real estate market, and the third consecutive year of significant growth in median house prices. What that means for private house sales in the coming 12 months is as yet unclear, however some industry prognosticators are beginning to make a few predictions.
As we approached the closure of last year, there were signals of an impending downturn in the property markets of our major cities. While figures from CoreLogic RP Data show that, over the year in total, median prices across the country grew by 8 per cent, the biggest drivers of that growth showed some inconsistency late in the year.
Evidence is mounting that the booming Australian property sector of the past several years is finally cooling.
According to CoreLogic, Melbourne's median house prices sunk by 3.5 per cent in November alone, while in December Sydney's values fell by 1.2 per cent. It may not be quite enough to start panicking, but evidence is mounting that the booming Australian property sector of the past several years is finally cooling.
If you are debating your real estate options heading into 2016, speaking to an expert such as a buyer's agent can help clarify what's happening in specific parts of the country where you might like to buy.
What is the industry saying?
While there have been no outright declarations of doom falling on Australian real estate anytime soon, the general consensus amongst industry groups is that this particular property cycle may have reached its zenith. Domain feels that median prices are expected to continue growing through 2016, albeit at a rate much lower than the preceding few years.
As always, fluctuations in the market vary between cities, so let's take a closer look at what is expected for Australia's three largest centres.
The jewel in the crown of Australian property since 2012, Sydney's median house prices rose by an impressive 16 per cent last year, according to Domain's year-end State of the Market report. After breaking huge barriers in 2015, notching up sales worth more than half a billion dollars and smashing the national house record, the expected dip in the industry is likely to hit our largest city the hardest.
According to Domain Group senior economist Dr Andrew Wilson, growth in Sydney is forecast to drop to just 4 per cent. It's still in the positive, but it's a comparative slump when held against 2012-15.
"The days of two figure growth are well behind Sydney, there's no rational case for more double figure growth," Dr Wilson said.
After languishing behind its larger sister city for years, 2016 is the year that Melbourne is expected to take its place atop the throne as the fastest-growing property market.
Population growth in Victoria is happening faster, at 1.9 per cent compared to NSW's 1.5 per cent.
That said, the forecasted difference between the two centres is razor thin, with Dr Wilson believing Melbourne will grow by just 1 per cent more. Both cities have comparable populations – in 2014 the Australian Bureau of Statistics (ABS) found Sydney was home to 4.84 million residents, while Melbourne had 4.44 million.
However, population growth in Victoria is happening faster, at 1.9 per cent compared to NSW's 1.5 per cent. It's that higher number of new residents flooding into Melbourne that was likely to continue driving medians up. More people leads to more competition for housing, which in turn leads to higher prices.
Still running third behind Sydney and Melbourne in the median price growth stakes of 2015, Brisbane emerged at the end of the year as the nation's best-performing major city. In fact, CoreLogic's Daily Home Value Index on January 6 showed the Queensland capital achieved a 1.79 per cent rise across the quarter, while the four remaining largest cities all experienced falls.
Domain forecasts a 3 per cent rise in Brisbane in 2016, however CoreLogic head of research Tim Lawless notes that housing affordability is still much greater than in Sydney and Melbourne, something which could drive home buyers north in search of more achievable private home sales and investment opportunities.
Using a buyer's agent in 2016
Whatever you decide to do in the coming year, whether you're searching for your first house, looking to upgrade your family home or hunting for new investment opportunities, it's important to get the advice of an expert.
It's true that, at this early stage of 2016, any claims made about the nation's real estate markets are simply educated speculation. If you are seeking trustworthy advice about where to buy property this year, speaking to a buyer's agent now is an ideal first step.
At Cohen Handler, you'll find Brisbane, Melbourne and Sydney buyer's agents all ready to assist you, with years of experience and close connections to industry professionals. With our access to off-market properties, you might even find yourself locking down that dream purchase before it's even been seen by the wider market.
Make an appointment to speak to a buyer's agent today, and start 2016 on the right foot.