In the last few weeks of October, spring was well and truly sprung and there is a new energy around. People are certainly thinking about property again. After a fairly lack lustre winter, buyers are on the hunt. The market strength has moved back to the seller and away from buyers. The temperature is not yet at FOMO (Fear Of Missing Out) but FONGO (Fear of Not Getting Out) is a no longer diagnosable.
Property research group Core Logic’s latest report found that the prestige end of the market is driving a strong rebound. The top quartile of the market in Sydney in Melbourne has had a 4.2% and a 4.6% capital gain in the September quarter. The same is happening in Brisbane, but not as strongly. October had the biggest monthly price rise since 2015.
Past trends would indicate that this top-end revival will be duplicated in Byron Shire as well. Early signs with some spring listings have borne this out. A number of listings and sales I am involved with show strong inspection numbers, early offers and properties selling at top, or over, their advertised ranges.
Interest rate reductions have only had a part effect on this. Money is cheaper to borrow, yes, but the main motivator is on the other side of the interest rate equation. Investors have no incentive to park money in savings accounts or managed funds – the returns just aren’t there. And without a federal or state housing policy to help fix the housing shortage or doing something about rental stress, it will be business as usual.
Property downturns have occurred in the mid-1990s, 2005-2006, 2008-2009, 2011-2012, and now this one. The graph below shows the year-on-year fluctuations over this period. This most recent downturn from the high of late 2017 has been relatively minor, despite dire predictions of a 20% plus decline.
The Byron market (2481) for example has come off the high $1.7M median price of late 2017. It now sits at a much more reasonable $1.35M. Sales turnover has also nearly halved. There were just over 80 sales in 2017. To date in 2019 there have been just over 40. It will be interesting to see where we are at this time next year.
The silver lining of a boring, unadventurous political environment is the government’s clear aim to engineer a stable and growing property market. The Australian economy is so weighted around a healthy construction property market and holding on to power is by keeping them happy in the suburbs. Unfortunately this philosophy does not engineer a diverse vibrant economy with equally vibrant sectors. Eggs in one basket etc.