The market is coming off a giddy eighteen months but there is much to be confident about next year.
For the Sydney property market, it’s going to be a happy, but steady, new year. All predictions are that while 2015 home price growth won’t reach the heights of this year – of about 11 per cent according to Domain Group’s Andrew Wilson – there will still be growth.
“We’ve been seeing a slow down for some time,” says Charles Tarbey, chairman of Century 21 Australia. “But moving forward, it’ll be steady growth next year.
“We’ll still see an increase in stock coming on to the market, some new and some that won’t sell at the end of this year, so buyers will have more choice, with the power of sellers and of buyers balancing out.”
Dr Wilson agrees, saying affordabiity barriers are starting to kick in to slow price growth since incomes aren’t rising enough to sustain such strong levels. At the same time, there will still be plenty of stock on the market put on by vendors eager to take advantage of good prices, so buyers will be “spoilt for choice”.
He forecasts price growth of 5 to 7 per cent over 2015, with the strongest areas being the inner west, east, lower and upper north shore and the Hills district. “But overall the Sydney market will be healthy,” says Wilson. “NSW has the strongest economy, unemployment is low, there’s plenty of confidence around and we won’t be seeing interest rates changing any time soon, while there could even be a cut towards the middle of next year.”
The spring clearance rates have now been below 80 per cent for the past six weeks, points out Tim Lawless, head of the RP Data research and analytics team.
“In late January and early February when the marketplace becomes active again after the break, my guess is that the market will still be very strong, but not as strong as the finish of this year,” he says.
“Confidence will still be high, but there is a disconnect between the exuberance of strong prices and the feeling that the marketplace is overheated.”
Investor activity is likely to continue at high levels, with Tarbey saying the wise ones will be targeting homes likely to appeal to the top of the first home buyer market, or the lower rungs of the second home buyers. That could mean a good one-bedroom unit in a popular location in the east or inner west, or a two-bedder somewhere such as Dolls Point in the south.
Many investors, put off by rising prices in Sydney’s traditionally cheaper markets in the west and south west, and rents that haven’t kept pace, will go even further afield in search of better yields, says Brad Beer, managing director of tax depreciation specialists BMT.
“They’ll be after growth and better rents in regional areas, like on the Central Coast, Nowra and in Queensland, from where people can work remotely with technology,” he says. “Investors will also look at all the new developments to be built along Parramatta Road but if that’s released too fast, demand may take some time to pick up.”
Owner-occupiers meanwhile might continue to be encouraged by the good 2015 market to continue to make lifestyle decisions about buying, upgrading and downsizing, believes Brian White, chairman of agency Ray White.
“The market will still be strong enough to make sense for people to put their long-term plans into operation, and have the confidence to do so.”
LIKELY HOT SPOTS IN 2015
THE INNER WEST
Houses: Median price $1.24 million; last quarter growth 9.3 per cent; year-on-year growth 21.6 per cent
Units: Median price $663,500; last quarter growth 3.6 per cent; year-on-year growth 12.5 per cent.
“It will continue to go well,” says Ee Real Estate principal Ee Poh Ling. “Buyers love its great public transport, light rail, proximity to the city, popular restaurants and the gelato voted the best in the world!”
THE LOWER NORTH SHORE
Houses: Median price $1,757,500; last quarter growth 5.63 per cent; year-on-year growth 17.2 per cent.
Units: Median price $700,500; last quarter growth -3 per cent; year-on-year growth 2.3 per cent.
“The market here is very positive and bullish,” says Richard Harding of LJ Hooker Neutral Bay. “There’s no reason for change.”
THE UPPER NORTH SHORE
Houses: Median price $1.13 million; last quarter growth 9.7 per cent; year-on-year growth 27 per cent.
Units: Median price $631,000; last quarter growth -0.1 per cent; year-on-year growth 8.8 per cent.
“People love the area, and the Hills, for its schools and then there are the improvements to infrastructure coming,” says Lynette Malcolm of Chadwick Real Estate in Turramurra.
THE EAST
Houses: Median price $1,625,500; last quarter growth 4.9 per cent; year-on-year growth 16.9 per cent.
Units: Median price $730,000; last quarter growth -1.4 per cent; year-on-year growth 7.4 per cent.
“We have many qualified buyers keen to buy but need more properties,” says Gary Sands of Di Jones Real Estate.
Source: Domain Group