Across January 2018, the average value of the Australian property dropped by 0.3%, with a steeper 0.9% seen in Sydney. With numbers like that, it could be an indication that the property market is cooling for now.
Media coverage of this has been largely over exaggerated, with certain publications heralding it as a sign of an imminent market crash. Should you be worried about this market decline? Read on to find out the answers to some of the key questions you should be asking.
1) Should I be Concerned About a Decline in House Prices?
Not really. A slight drop in house prices isn’t something most Australians should be concerned by, as property prices are cyclical, meaning there are troughs as well as peaks. Although we might be experiencing a slight decline now, property prices will likely bounce back in the long run.
2) Can I Still Get Capital Gains
Although it might take a bit more work than it would have done 3 years ago, the answer is still yes. If you’re looking for a property that will increase in value both over the short and long-term, they can still be found if you look in the right places. For example, Hobart has seen property prices grow over 18% over the year to January 2018.
In January alone, regional areas outside of capital cities saw price increase of 0.2%, a strong indicator that rural and regional areas could be the places to look if you’re after capital gains.
3) Which Market Areas Carry the Most Risk?
One of the simplest ways to spot a property market that’s unlikely to increase in value is by identifying oversupply. If there are a wealth of vacant properties within an area, it’s best to stay clear, as buyer demand isn’t meeting supply. In fact, one recent study found that there could be as many as 164,000 surplus properties in Australia.
The oversupply is highest in Queensland, where the dwelling surplus is sitting close on 60,000 – the majority of which is likely to be apartments in the centre of Brisbane. The research paper also mentioned Western Australia as an area likely to be suffering from oversupply, as a result of the mining boom and subsequent decline.
4) Should I Wait Before Buying a Property?
Probably not. If you’re in the market for a home and you think now is the right time in your life for you to buy, go for it. If you hold off and wait for the market conditions to brighten up, you could be waiting for a long time – potentially years. Despite this, being cautious is never a bad thing – especially when buying in a time where there’s a degree of market uncertainty.