2015 was a hailed as a bumper year for Australia’s property market, not least because the average Australian home price jumped by a whopping 8.7%. But virtually no one - us included - is tipping home prices to rise to the same giddy heights in 2016.
So what does this mean if you’re trying to sell your place in 2016?
The new two-speed economy
The reality is that last year’s headline figures mask the fact that growth in property prices was far from evenly spread.
In fact, 2015 was a very bad year for homeowners in Perth and Darwin, where the end of the commodity boom also ended the demand for housing. Property prices in the two cities fell by 3.1% and 4.2% respectively.
In other words, a person who owned a $1m home in Darwin at the start of 2015 was left with a home worth only $958,000 by the end of it.
Things weren’t much better for homeowners in Hobart, where prices rose by just 1.1%. While Adelaide (3.3%) and Brisbane (4%) enjoyed what could only be described as ‘moderate’ growth.
Really, 2015’s property madness was almost entirely confined to Australia’s two largest cities: Sydney (12.8%) and Melbourne (11.8%).
Sydney and Melbourne no longer the main game
What’s also interesting to note is that the growth in Melbourne and Sydney was confined to the first three-quarters of the year. By the December quarter prices in both cities had started to slip - by 1.0% in Sydney and 0.5% in Melbourne.
Many put the squeeze on prices in the two cities down to the big four banks adopting tighter lending criteria both for investors and owner/occupier. Others suggest house prices in our two biggest cities have become unsustainably high.
Whatever it is, Sydney is clearly coming off the boil.
But it’s also worth remembering that it’s coming from a very high base: 2016 was just the icing on the cake on a run of bumper years that began in mid-2012. In the time since then, Sydney’s average property price has risen by 40%, leaving most homeowners way ahead on where they started from.
Meanwhile, while Melbourne’s prices seem to have picked up again during the first two months of 2016. And the city seems to still be showing strengths - especially for quality housing stock close to the city.
But, given the number of cranes dotting the Melbourne skyline at the moment, we’re least a little wary of what will happen when so many apartments come onto the market later this year.
The action shifts
One area that we expect to buck the trend and record strong growth is South-East Queensland.
In the final quarter of 2016, Brisbane prices rose 1.8% and much of this action centered on new developments close to the CBD.
But many people expect 2016’s real hot spot to the Gold Coast, not least because of the extra attention the area will receive in the lead up to the 2016 Commonwealth Games. (In fact, one analyst predicted Gold Coast prices to rise as much as 11% this year.)
And prices have been flat on the Gold Coast since the time of the GFC… In other words, it has some catching up to do.
Another market that seems to be hotting up while others cool is Canberra’s. It outperformed Brisbane in the final quarter of 2015 and continues to show signs of strong growth.
Unfortunately, however, we still see Hobart and Adelaide struggling for anything other than sluggish price growth. And we don’t see Perth’s property market recovering any time soon.
What this means for you property
If you’re in Sydney or Melbourne and you’re looking to sell, don’t expect queues of buyers to be streaming from your open home like we saw in last year’s hot property market.
Instead, we think it will be reasonably difficult to sell real estate in most parts of Australia in 2016. And that makes it vital that you do your homework in choosing the best agent for the job.
Even in Brisbane and the Gold Coast - where selling should be easier - it’s important that you choose a real estate agent who has a track record of achieving good prices for properties just like yours.
Agent Select lets you make an informed choice on the best agent to sell your property. Our custom-built algorithms crunch all the sales data to let you compare the best performing agents in your area and for your property type. You also get compare their plans for selling your home, the commissions they charge and their selling strategy side-by-side and in the same easy-to-understand format.
All you need to do is sit back and let them compete to give the best deal when it comes to selling your home.