Property predictions for 2018: what to expect this year
The new year is here, so what will it bring for the property market? Here are our tips for 2018 trends
There will be a range of property coming to market with added incentives from the developer, including stamp duty-equivalent benefits and possibly discounted prices.
This will be especially prevalent in Victoria where stamp duty changes from this year have had the greatest impact on investment buyers.
The rise of nominations
Where purchasers have failed to settle, there will a rise in "nomination" properties which allows the developer to resell those properties once completed.
Given the retained deposit and other savings, these units (still classified as new) should be able to out-compete both the resale market and comparable off-the-plan properties, but they will not be publicly advertised.
Nomination property sales will likely occur within a finite window up until December 2018, given most projects have a build time of around 18 months and were sold before Victoria's stamp duty exemption removal came into effect on July 1, 2017.
Funding for foreigners
The funding environment will change again in 2018.
This year we saw short-term funding products enter the market and expensive longer-term options appear. There will be more of these, however a new raft of better value options will emerge.
Current funders will close their books or at least limit their offers as they become full and their caps are reached. The new wave of entrants in this space will most likely include US equity and hedge funds and established global banking organisations.
OTP meets Airbnb
We expect to see a short stay/build-to-let hybrid model emerge in 2018. There has been a lot of talk of build-to-let but "hybrid" will be the theme for 2018.
Developers will add failed-to-settle stock to apartment hotel offerings, new project launches will likely have apartment hotel offerings included, possibly a hybrid model of some developer-owned and some purchaser-owned hotel apartments which would use Airbnb to promote short stay rentals.
As well, this new category will also likely drive a resurgence of investors who had backed away from the market in 2017.
Economists and analysts may even start to wake up and start including (or more accurately excluding) these short stay dwellings from their rental stock demand analysis. More companies will be founded to capitalise on this market, including not only operators but sales companies.
New feature inclusions
Developers will start including features in some new developments to service this hotel apartment/short stay market.
These might include features such as separate entrances, building segregation with floors that allow short stays and those that don't, bag storage, smart key access, lockers and more.
Developers will wish to appease owner-occupiers and avoid complaints about accommodating short stay guests, so will try to plan this type of integration at the design stage as cleverly as possible.
No bursting bubble
2018 will certainly be a buyers market, with things having returned to a more normal market dynamic in the second half of this year.
Off-the-plan sales will require hard work from sellers and project marketers alike and certainly projects have a longer selling cycle, but there will be no "bursting bubble".
Greater product mix
The days of developers trying to cram as many tiny apartments as possible into a project and selling them largely to investors are over.
We are seeing more townhouses, more boutique projects, more design changes to existing plans to accommodate larger owner-occupier custom designs, resulting in increased prices as sizes increase.