The Australian property market ended the year with a mixed bag of results that point to the diverse and complex nature of the current market.
Corelogic results show that half of Australia's capital cities recorded a decline in dwelling values over 2018, led by Sydney (-8.9%) and Melbourne (-7.0%). Perth (-4.7%) and Darwin (-1.5%) also recorded lower values while all other capital cities recorded an increase in values for the calendar year.
Regardless of the diverse results, it would seem that the deteriorating conditions in Australia's largest housing markets of Sydney and Melbourne, and a tighter lending environment, are having an effect on the rest of the nation with most regions recording weaker conditions relative to the 2017 calendar year.
While I do not expect a housing market collapse in 2019, conditions may continue to weaken which may mean both buyers and sellers are looking for useful ways to get an edge in 2019.
BUYERS
Buyers should be conscious that this current lull in the market may not last long and if they don't act at some point, they could find themselves in the same position they were prior to the recent downturn. If they are buying for the long term, looking to save a few more thousand dollars by trying to time the market may not be the most prudent strategy and comes with added risks.
Tighter lender conditions are currently catching many buyers out. Instead of securing finance before starting the buying process, many buyers are doing it the other way around.
By securing finance at the start of the process, buyers put themselves in a position to act quickly and this can lead to a more favorable outcome with agents and sellers.
First home buyers have found it very difficult in recent years to access the market. There are now favorable market conditions for this group and many great opportunities.
The generous incentives for first home buyers remain on offer in many markets but no one really knows how long they will be there for. Also, when credit conditions start to improve, first home buyers may once again be faced with stiff competition for properties
These factors in combination lead me to believe that first home buyers would be wise to act decisively in 2019 while ensuring that they do not over extend themselves.
Investors also have an array of opportunities currently available in the market. Some of these opportunities are in areas that they likely couldn't have afforded in recent times.
While conditions are currently favorable to investors, they should look to pay close attention to planned housing coming on line in their preferred markets. Many areas will experience an influx of new supply over the coming year and I anticipate that rental returns will fall in many of these markets, so investors would be wise to have contingency plans in place.
This scenario means that investors should look to protect their income producing assets by trying to secure good tenants. I have always believed that the risk of losing a good tenant over a $5 to $10 rent per week is not worth it. Landlords with good tenants should perhaps be looking to reward this group with things like free gardening or minor property improvements.
SELLERS
Sellers need to closely watch conditions in their local market and adjust their sales strategy and pricing expectations accordingly. In many markets, gone are the days where you can list a property and know it will be snapped up immediately. Your property has to be attractively priced and your sales strategy needs to be focused on garnering the largest amount of interest possible.
This dynamic means that it is critical to meet with your agent regularly while constantly looking to refine your listing strategy to help ensure your property stands out in what could be a crowded market.
Many people look to appoint an agent that offers the lowest commission rate, but I believe this tactic can be fraught with danger. I have always believed that if an agent can't negotiate a decent commission rate with a vendor, he or she may not be best placed to negotiate the sale of a dwelling.
Agent selection is going to be incredibly important for sellers in 2019 and I encourage people in this group to diligently vet agents and look for indicators of performance in a local market, not activity.
While market conditions are deteriorating and I suspect will continue to do so to at least to the end of the first half of 2019, property is still selling, and buyers and sellers can achieve a positive result if they approach the process in strategic and diligent way.
Source: Charles Tarbey
Chairman & Owner
CENTURY 21 Australasia