What will happen to property prices in 2019? A new report from realestate.com.au has some tentative good news for homeowners…
If you are wondering whether your property will rise or fall in value over the next 12 months, a new realestate.com.au report has some tentative good news.
The leading property search site’s Property Outlook Report, released today, suggests Australia’s housing downturn has been over-hyped by many media commentators and property data companies.
The report concedes Australia is “now in the midst of a housing downturn”, but the declines are “not as bad as widely reported” and “not as pronounced as first thought”.
The downturn is largely affecting the Sydney and Melbourne markets, which have dropped 1.48 per cent and 5.93 per cent according to realestate.com.au — less than the figures provided by some other real estate data companies.
Adelaide, meanwhile, continues to buck the downturn trend, with realestate.com.au showing a 1.1 per cent rise in property prices over the past year.
Realesate.com.au now lists the City of Churches’ median property price at $437,511. Houses are at $465,000 (up 1.3 per cent on last year) while units stand at $340,000 (down 0.1 per cent).
Hobart, Canberra and Brisbane are also recording growth.
The report predicts prices will continue to drop in Sydney and Melbourne in the next six months, but the falls will not be as severe as what is widely being reported by other data sources.
What happens after June will depend on a couple of factors: the results of a banking royal commission and the next Federal election.
THE BANKING ROYAL COMMISSION
The report offers some hope for the housing market nationally, suggesting bank restrictions on borrowing (a factor behind the downturn) are unlikely to get any tougher in coming months.
Banks began restricting home lending when a Financial Services Royal Commission was announced at the end of 2017.
“Early signs suggest restrictions on home loans will not be a big focus of the final report from the Financial Services Royal Commission, and as such, borrowing conditions should not get any tougher for home buyers,” the report states.
THE FEDERAL ELECTION
A lesser-known factor that could “dramatically impact the market” is the next federal election, according to the report.
Realestate.com.au Chief Economist Nerida Conisbee is predicting a change in government during the first half of 2019 but warns the Labor Party’s plans to restrict negative gearing and capital gains concessions could lead to price falls.
“For house prices, best case: lending restrictions are eased up and there are only minimal changes to the negative gearing,” Ms Conisbee says.
“If this happens we will see flatter conditions in the second half of the year.
“Worst case: finance becomes even more restrictive and negative gearing changes outlined by the ALP kick in. A continual fall is then likely for Melbourne, Sydney and potentially the rest of Australia.”
A CLOSER LOOK AT ADELAIDE
The report shows Adelaide is one of four capital cities to have experienced price growth in the past 12 months – the others were Hobart, Canberra and Brisbane.
All of Adelaide’s regions recorded median property price rises, according to the report with the southern suburbs recording the highest 12-month price growth at 1.4 per cent. The west recorded a 1.2 per cent rise, while the north recorded 0.9 per cent and Adelaide’s City, East and Hills region rose 0.4 per cent.
Realestate.com.au is touting Medindie as Adelaide’s first $2 million suburb and lists 23 other suburbs with medians over $1 million, almost all of which saw double-digit price growth in the past year.
As previously reported by The Advertiser, Adelaide Hills suburbs are among the most popular in Australia and the report lists Crafers West, Aldgate and Belair as particular favourites of people searching on realestate.com.au.
Ms Conisbee said some of Adelaide’s cheapest suburbs, including Gawler West and Elizabeth, had also experienced significant price rises in the past year.
She said interest in Adelaide was partly being driven by investors, with high volumes of searches on realestate.com.au coming out of Melbourne and Sydney.
Job growth and recent announcements that SA would host a space agency, and submarine construction were also driving population and housing demand, Ms Conisbee said.