Around the country in 60 seconds: how are our property markets handling 2020?
Economists and property researchers are feeling good about the future. They’re saying, as a whole, Australia is considered a growth market for property prices. And they’re putting it down to our financial regulations and a broadly stable economy. One researcher even said that the next five years in Australia will be better than the last five in terms of growth in median dwelling prices. This is all well and good, but I wanted to break this down for future buyers, those considering bidding in 2020. The nation might be forecast to do well, but that doesn’t really help you decide where and when to buy. So let’s look at the performance of our capital cities in the few weeks of data we have for the new decade.
- Top start for the top end. Locals are saying that Darwin real estate has had its best start to a calendar year in a decade. In the last quarter of last year, Darwin experienced a whopping 33 percent increase in sales volumes, largely driven by affordability. The median house price in Darwin is $460,000; by the way that’s about half of the median price in Sydney. And as for the typically dormant first fortnight of a new year, well it has been greeted with unusually busy open homes filled with eager local first home buyers (a solid section of the Darwin market) and families feeling it’s time to upsize. It’s those low prices (hello, affordability) that have spurred this level of action, alongside eased lending criteria, and improved sentiment. What is that sentiment? It’s the consensus that the bottom of the Darwin market is behind them, and that locals better act quickly before savvy interstate investors start entering the bidding war.
- Big cities see upward trends after a kick in the guts. If there was a sound that you could attach to the last quarter of last year, it would be a big fat sigh of relief for our two most populous capitals, both of which recorded average real estate growth above 6 percent in the last quarter of 2019. A year ago, these cities were experiencing dismal clearance rates of around 40 percent. Today, it’s hovering around 70 percent. Both markets have kicked off 2020 with energy, and data analysts say their price rises will have a ripple effect across the other capitals.
- The sparkling harbour city. Sydney’s median house price is currently $973,664. Ouch. But that figure has not deterred new year buyers, and it’s predicted not to deter buyers for the remainder of the year. Sydney is one of three global cities tapped to have the best property growth potential in 2020 alongside Moscow and Lisbon with increases of between 6 percent and 7.9 percent forecast this year.
- Melbourne. It’s no longer the more affordable big city, with prices edging closer and closer to Sydney. Melbourne has a median price of $859,500, and judging by the two consecutive quarters with growth of more than 3 percent (the best growth since 2017), the impact of more investors and increased migration is being felt in the property market. Melbourne’s population - the biggest driver of property price - is showing no signs of slowing. Seriously, they’re saying that Melbourne is set to overtake Sydney in population as soon as 2026, so price growth will be interesting to watch here in years to come.
- Brisbane begins its rebound. The Brisbane property market had slower growth for homeowners and investors over the past few years but 2020 is shaping up to be more promising for the Queensland capital city with a 0.5 percent increase in house values in January and 2 percent growth over the quarter. And the good news for buyers? Its price point remains affordable, with the median house price sitting just shy of $500,000 - great for first-time buyers looking to get a foot in the market and investors alike. Oversupply in Brisbane apartments is also starting to moderate so we could begin to see a rebound in this market.
- Houses trump units in political hub: In the government bubble that is the ACT, jobs and population growth helped Canberra outperform the nation with a 2.3 percent increase in property values in the past year. The median property price is now $611,841 in Canberra thanks to a mix of population, private money and government proximity. While homes are doing well, units and apartments are oversupplied and have only seen 3.9 percent capital growth in the past three years, compared to 14.5 percent for houses.
- City of Churches blessed with investment: While Adelaide was one of three capital cities that recorded a value drop last year, property pundits are big believers in its potential. Yes Adelaide experienced a measly 0.2 percent decline last year, but it’s the first drop the city has experienced since 2011. There are some exciting economic fundamentals here for the year ahead, like the investments and increases in hospitals, tertiary education, industry and military, but it’s hungry interstate investors who are likely to push prices.
- Low stock numbers in the west: Perth currently has the lowest median house value of any major capital city. Home values in Perth took a beating in 2019, down 6.8 percent on the previous December, settling at a median of $437,080 by the end of the decade. But it’s not all doom and gloom. With jobs returning and population growth improving for the state, buyers are capitalising on lower prices and easier lending standards. In saying that, there’s not a lot on the market so far this year, so buyers are competing over limited stock. But it’s a city catching the eye of some investors, thanks to low vacancy rate and stable median rents of $350 per week.
- Hobart housing hits new heights: Hobart has a huge supply challenge that is driving prices of both rentals and sales skyward. For example, rents in some suburbs have risen by 20 percent in the past year. Yes, 20 percent! Great news for investors; bit rough for renters. Vacancy rates are about as low as they can get, 0.6 per cent compared to 2.5 percent for the rest of the nation. This market is so interesting. I can’t wait to see where it goes in 2020.
Let me know where you’re looking to buy, and we can crunch the numbers together.