Has the property market reached a peak?
Is the property market showing signs of cooling? Has it reached a peak? We put the question to buyers agent, renovator and TV presenter Chris Gray and senior economist for Fairfax-owned Domain Group, Dr Andrew Wilson.
Chris Gray - buyers agent, renovator and TV presenter
There isn't one property market and there isn't one property cycle, so I'm very cautious when people comment on or question whether the market is turning one way or the other. It all depends on where you are geographically, what type of property you're dealing with and at what price point.
When it comes to the investment market, I, and a lot of my clients, tend to purchase median-priced properties in the blue-chip suburbs five to 15km from the heart of the CBD. We do this because they're in short supply (due to the three-storey height restrictions) and they're in high demand (due to the young professionals who love the beach and cafe lifestyle but still want to be close to work). I specifically prefer Sydney as I believe it's less reliant on one or two single industries than some of our other cities.
Due to the factors above, these properties are some of the most stable and resilient in the market and don't fluctuate as much as others when the economy changes. We're finding that they're in even more short supply than usual as a lot of vendors are hesitant to sell as they know it's hard for them to re-buy. And there are even more buyers than usual as there is lots of unsatisfied demand from the past 12 to 18 months.
I don't see much change at all in this segment of the market, and don't see it changing for a while. Some agents are ringing up us buyer's agents and saying they have vendors who are prepared to sell before auction, but often their expectations are $50,000-$100,000 above what we would normally pay, as they are still comparing their property to the record price that sold down the road a few weeks or months ago. And as we all know, most vendors think their property is always better than the neighbour's.
Having said that, I know that there are other segments in the market that are being reported as cooling slightly. As you move into the more expensive properties, not everyone is confident about the economy, and if you're taking out a $1 million or $2 million mortgage you may well be hesitant about paying too much. And if you're buying in the outer suburbs where there is more land and there are many similar properties, then are you as desperate to pick one up or can you wait a few more weeks and see what else comes along?
Over the past two decades I've learnt that good properties always sell well in any market and those that don't quite tick all the boxes are the first to suffer.
Dr Andrew Wilson - senior economist for Fairfax-owned Domain Group
Sydney has been the hottest of hot housing markets over the past two years recording extraordinary price growth through all regions and price ranges. Recent signs however are that the Sydney market is coming off the boil with clearance rates falling to the lowest level this year and below those recorded over the same period last year.
Activity in the Sydney market should remain solid over the remainder of 2015 although price growth will moderate providing a more balanced market.
The Melbourne market has stepped up a gear this year following a subdued end to last year. Auction clearance rates moderated early into winter, however August has seen a solid revival in the market with confidence and prices rising. Melbourne's outer suburban markets, particularly to the north and the west, are benefiting from an improvement in the local economy. Eastern suburbs markets however remain the strongest for price growth. Melbourne prices this year are set to exceed those recorded last year.
The Brisbane market has produced modest results this year below expectations of a solid to strong year. An underperforming local economy continues to act as a drag to buyer activity particularly in the budget suburbs to the south and north of the city. Inner and middle suburban properties in mid to higher price ranges however continue to attract buyers and price growth.
The Adelaide housing market continues to produce its characteristic resilient performance despite the constraints of the worst performing economy on the mainland. Budget suburbs particularly to the north remain underperformers due to concerns over job security and unemployment. Demand for higher priced properties closer to the CBD to the east and west continue to attract solid demand. Price growth in Adelaide this year is set to exceed that recorded last year.
The Perth housing market continues to weaken as the shake out in the local economy translates into higher levels of unemployment. Prices can be expected to continue to move sideways at best over the remainder of 2015. Higher priced properties closer to the city remain in demand however, with first home buyer activity also encouraging.
The Canberra housing market continues to improve, reporting its highest auction clearance rates over August for six years. The local market is clearly in revival mode now recording consecutive quarters of price growth with the prospect of a robust spring selling season ahead.
The Darwin market is also showing some early signs of revival following a subdued year in 2014 for buyer activity and price growth. The prospects remain positive for price growth to resume and consolidate this year in the Darwin market reflecting the still robust nature of the local economy.
The Hobart housing market continues to track sideways with prices still below those recorded five years ago at the peak of the previous cycle. The constraints of a weak local economy continue to be a drag on housing market activity.