Property in perspective
As 2017 gets into full swing, LJ Hooker’s National Research Manager Mathew Tiller takes a look at the year that passed and what’s in store for the remainder of 2017.
Looking back at 2016 summarised a tale of two market types; those on the up and those challenged by historically larger stock volumes.
Sydney and Melbourne were again the two standout performers with dwelling values in Sydney rising by more than 15% and Melbourne over 13%, according to CoreLogic. This result was driven by strong levels of investor and owner-occupier buyer demand and a distinct shortage of properties for sale.
The two surprise performers of the year were Canberra and Hobart, with both cities recording median price increases of 9.3% and 11.2% respectively.
Supply & demand
On the supply side, many markets saw building approvals and construction reach record levels, particularly in Melbourne, Brisbane and Sydney. However, increased construction activity has not yet stunted price growth in these markets. This is because nearly all of the new dwellings completed in 2016, and due to complete in 2017, were apartments. Plus, the majority of the new supply is only limited to a handful of inner city suburbs with listings of existing properties in serious shortfall in most capital cities.
And what about the demand side of the equation? Apart from cities and regional areas which had high levels of exposure to the mining and resources sector, investors, owner occupiers, downsizers, upgraders and rentvestors™ were all very active in 2016.
So what’s in store for 2017?
The large amount of new apartments which have been approved, over the past few years, will begin to reach completion. Although the detached housing market won’t be affected by this, apartments will dampen price growth overall, especially in a handful of inner city suburbs.
Interest rates will also play a big role in 2017. A lot of mortgage providers increased their rates, independent of the RBA, in late 2016. Rising government bond yields and increased interest rates in the US may lead to higher funding costs for Australian banks. This means more interest rate increases over the coming year.
Despite this, buyer demand is expected to remain strong, thanks to ongoing employment and population growth.
The term rentvestor is a registered trademark of LJ Hooker.