The first week of the New Year is over and already there are good signs across property markets according to Core Logic RP Data.
The Sydney market now looks to have balanced, dipping 1.2% in December and 2.3% in the final quarter. However the year finished strongly for other markets, setting buyers up with opportunities in 2016.
Melbourne held steady moving up 1% in December after a significant amount of stock came onto the market, with some auctions even being held on the weekend of the 19th. Brisbane and Adelaide were the strongest finishers in the final quarter, pushing up 1.3% and 0.6% respectively.
2015 saw some extraordinary figures across powerhouse markets Sydney and Melbourne. YOY, Sydney recorded an 11.5% rise in value, while Melbourne moved 11.2%. In dollar figures, Core Logic estimate that “Sydney home owners have seen approximately $82,000 added to their wealth thanks to the strong capital gains over the year while home owners in Melbourne have seen the value of their dwelling grow by approximately $60,400.”
Whether the extraordinary performances of these markets continues remains to be seen, but the worst fears that the markets will bottom out completely, hyped by some quarters in 2015, seems unlikely according to the Core Logic report.
In the forecast for 2016, the report anticipates interest rates “to remain at their current historical low setting, which will continue to stimulate housing demand”. The two biggest markets will likely maintain more moderate growth over 2016, “considering population growth has remained strong in these areas and economic conditions are very healthy in these cities, we would be surprised if dwelling values fell materially before conditions start to level.”
Arguably the most anticipated market in 2016 will be Brisbane. As southern capitals boom, Brisbane has been increasingly seen as one of the biggest opportunities for buyers. 2016 will likely see that potential fulfilled.
Brisbane has the highest rental yields of any capital city, and has enjoyed steady YOY growth of 4.6%. Although the sunshine state capital has not reached the level of gains made in Sydney or Melbourne, the confident growth, more affordable prices make Brisbane a hugely attractive prospect.
Adelaide is also another market to keep an eye on in the coming year. The South Australian capital is the most affordable of the five biggest capitals and offers strong rental yields for houses and units, bettered only by Brisbane, at 4.1% and 4.7% respectively. As in Brisbane, investors and buyers can find value in Adelaide compared to markets such as Sydney.
As a new year kicks off, property still remains one of, if not the most, popular investment preference. According to a survey conducted by Yellow Brick Road, purchasing property is the top financial goal for most people in 2016, with 44% saying their New Year’s resolution is to save for a deposit or buy an investment.
The trends of the 2016 market are yet to become apparent. As the market changes and moves through different stages of the cycle, it is important to remember that with change comes opportunity, and armed with right information, buyers will find plenty.