As we head into the start of 2020, the property market is quickly recovering from the price falls that were experienced in 2019. Byron Bay dropped 8% for the year ending Sept 2019. However, it is interesting to put that in perspective for the long term trends. RP Data has released a list of the top capital gain suburbs over the last ten years. Many suburbs in the postcodes between 2479 and 2483 were included. Two had median house price gains of over 100% over ten years: Brunswick Heads 106% and South Golden Beach 103%. Byron Bay’s was 87%. The overall winner for 20 years in all of Australia was Suffolk Park. Overall, coastal regional areas are showing stronger sales and price growth.
Regions will be Strong
Most pundits are predicting this trend will remain strong in 2020, especially in regions not adversely affected by the recent fires. They predict the recent strong growth in Sydney and Melbourne will be replicated in regions with good infrastructure and job potential. Regional centres with strong long-term growth rates include Orange, Dubbo, Goulburn, Bowral, Mittagong, Wyong, Terrigal and many others, according to Terry Rider from Property Observer.
In our area, the report mentioned a few towns as standouts. Kingscliff in the north has risen 12% in the past year and now has a median house price above $1 million. Nearby Tweed Heads has grown its median house price 11% to $790,000. Suffolk Park has increased by 12% to reach a median of $1.17 million.
Attached is a graph put together by a fellow buyers agency – Propertology. It shows median house price change over the last three years in all capital cities and then compares it to the change in a selection of regional areas. Most regions have performed better than all capital cities except Hobart.
There is a surge in building approvals and most industry bodies are predicting a solid rebound for the residential building industry. The December Oxford Economics Update shows that interest rate cuts and eased mortgage serviceability guidelines are acting positively on the market. There has already been a positive flow through and this report predicts continuing growth into 2022/23.
The only area of the industry to remain soft is high-density apartments, due to the ongoing concerns around regulation, insurance issues and oversupply. Insurance concerns may also be a growing problem in the residential market going forward, with premiums expected to rise after the recent bushfires.
The report states that ‘elevated population growth, a rising national dwelling stock deficiency, housing stimulus including interest rate cuts, and improving household confidence are set to provide considerable support to the residential building and renovation sectors.’
The shortage of listings has seen consistent auction clearance rates of 75% to 80% range in both Sydney and Melbourne. ‘Wounded bull bidders’ who missed out at earlier auctions are now prepared to go well above their previous limits. They’ve been hurt by previous auctions and now charge headlong into the next auction without regard to intrinsic market value, for fear of missing the market.
Don’t Wait for a Fall
If you are sitting on the sidelines waiting for the market to fall again, the advice is to prepare yourself for a long wait. We are now past the bottom of the market and are well and truly into the next property cycle. One well-respected forecaster is predicting median price rises in both Sydney and Melbourne of between 10-15% for the year.
Some of the most interesting analysis is Corelogic’s estimate of how long it will take until we reach and then exceed the prices seen during the 2017 boom. Tim Lawless from Corelogic estimates that if values continue to rise by an average of just under 1% per month, it would take approximately 6 months for housing values to return to those historic highs.
For your interest, Propertyology predicts the locations for most growth in 2020 will be: Launceston, Bendigo, Glenorchy, Melbourne, Mackay, Orange, and Whyalla.