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The Real Property Diary: November 2017

By November 14, 2017 No Comments

Every week we are subjected to various media reports about the Property Market in SE Queensland.  Each report seems to vary, on whether it’s the right time to buy, or it’s the right time to sell.  So what does all this mean for you?   In this week’s blog Nathan cuts through all that noise to bring you the REAL facts on whats happening in the market – without any sales talk or hidden agenda.

 

Often I will get asked the same questions by many clients who aren’t sure who to believe about the current state of the Property Market in our little pocket of SE Queensland…

Has the residential property market peaked?

Should I buy now or wait for property prices to fall?

Will southerners (Sydney and Melbourne dwellers) move to South-East Queensland to take advantage of our more affordable market?

These questions are not easy to answer.

As an experienced property advisor who has seen the good and the bad I can only rely on the current property facts which have been evident over the past 12-18 months:

  • Interest rates are low – generally below 4%
  • Banks has tightened lending policies especially for investors
  • Buyer demand is good especially from southern investors
  • Supply in most areas is not good – not much for sale
  • The quality of those properties listed for sale is generally good
  • Rental returns on your investment property are reasonable in most areas
  • Net interstate migration doubled from June 2015 to June 2016 (ABS)

I have heard recently (from a well known real estate agent) that market values in South-East Queensland are expected to increase by another 15% to 20%. This should occur if the facts above follow similar property cycles from the past. This is not happening as there has been only a small increase in market value levels in most locations over the last 12 to 18 months.

The only way we could see growth as predicted would be:

  1. Further cuts to interest rates
  2. Loosening of banking policies
  3. Increase in buyer demand for those looking to settle rather than invest
  4. Supply is constrained further
  5. An increase in rental yields either driven by lower interest rates or increasing rental levels
  6. Mortgage holders are able to settle their stress through lower interest rates

It is unlikely interest rates will be cut further as it appears monetary policy has done as much as it can and most economists have predicted the next interest rate move is up. Well this knocks out numbers 1 and 6. The banks aren’t expected to soften their stance on investment lending which knocks out number 2. To make a move to South-East Queensland southerners need to be retiring or expecting to be able to secure a good job. Unemployment in Queensland has dropped in recent times which could suggest number 3 could underpin some growth. Supply is already quite low there are some large master planned estates which will only increase supply in the short to medium term. Also if mortgage stress rises this may lead to an increase in supply which knocks out number 4.

We cannot rely on the theory alone that the recent performance of the Sydney and Melbourne housing markets will lead to interstate migration which will lead to 15% to 20% price growth. It is our stance that the current property cycle has mostly peaked.

So, is now a good time to buy?

The purchase of property whether for investment or occupation should be a long term view. Best not to rely on the theory that property prices always increase as this is not the case. If you are in the market to purchase, now is as good a time as any with interest rates being as low as they are. Any increase in interest rates however, may well result in a fall in house prices.

Food for thought?  Let me know what you think…send me an email with any question you may have regarding the Property Market in SE Queensland, always happy to have a chat.   Nathan@cobbproperty.com.au

 

 

Nathan Cobb is a specialist residential property advisor with over 15 years experience in the South-East Queensland property market. Having valued over 35,000 properties during this time, Nathan can provide qualified property advice for your next property purchase or sale.