2019 is here, with 2018 going down as one of the most contentious property years on record.
So what were the three biggest issues making news in 2018?
- 1. Property Market Crash in 2018
- 2. Brisbane’s time to shine, where to in 2019?
- 3. Stricter lending criteria ahead…?
1. Property Market Crash
The 40% market crash predicted by 60 minutes (those credible property experts) hasn’t quite come to pass.
The reality is Australia’s property market moves in cycles, from peak to trough and Australia’s largest market Sydney has seen over 80% growth over the past few years (and much more over the past 20 years).
While we have seen values in Sydney come off by 5.6% from their peak in July 2017 this is nothing new.
In the GFC we saw Sydney dwelling values fall 7% over 12 months, and after the Sydney Olympics between 2003 to 2006 we saw a reduction in values of 7.1% over the same time period. In fact, the falls we have seen over the last 12 months have been mild compared to previous downturns.
…But where to from here?
I think it’s important to remember that Australia doesn’t have one single property market. Each state, each city, each area has its own stage within the property cycle.
Overall there are lots of positive factors underpinning our property market including:
- ✅ Strong population growth and net migration up 27.3% year-on-year;
- ✅ Low unemployment and good employment growth, with ABS reporting “trend employment increased by 303,100 persons (or 2.5 per cent), which was above the average annual growth rate over the past 20 years of 2.0 per cent”; and
- ✅ Inflation is under control, at the lower end of the RBA’s target band of 2-3%.
2. Brisbane’s time to shine
Brisbane’s property market has been slow and steady, with dwelling prices rising 0.3% for the year to November, and 0.1% over the past three months according to Corelogic.
The property market in Brisbane is set for a strong start in 2019 thanks to a few major projects like Queens Wharf (aka the new casino), Howard Smith Wharves and very strong housing affordability compared to Sydney and Melbourne.
Brisbane’s property market is much more affordable than Sydney and Melbourne, according to research by Michael Matusik the current price to income ratio required to buy in Brisbane is 5.3 times at a median house price of $524,000.
Compare this to Sydney at 10.80 times income, and Melbourne at 8.40 times income with a median house price of $829,000.
Even at Hunter Galloway, we are noticing an uptick in interstate enquiries from people who are migrating from Sydney to Brisbane so we think this is a space to watch.
Our suburbs in Brisbane to watch in 2019
Average Annual Growth
Weekly Median Advertised Rent
Gross Rental Yield
3. Stricter lending criteria
While the Royal Commission has put more focus on the banks and their lending practices it certainly hasn’t stopped them from lending.
We have seen bank’s appetite for lending continue to be strong in 2018, and expect it to remain this way into 2019.
What are the secrets to getting your loan approved in 2019?
#1. Consider a different bank
Different lenders have different policies, and some simple things can make a massive impact including the amount they lend you.
Consider a single person on $50,000 per year looking to buy their first home.
There is a $67,000 different in how much the banks will lend… For this person earning $50,000 that is almost 1.4 years worth of salary difference!
So it does pay to look around and see what your options are.
#2. Reduce your interest costs with principal and interest repayments
2018 also saw a massive differential between interest only and principal and interest repayments – in some cases upwards of 1%.
So how can you get lower interest costs? Check out P&I repayments.
According to Macquarie Bank, “using a 0.5 percentage point [interest rate] differential, Macquarie found that a bank customer in the top tax bracket with a $500,000 loan would be $6,000 better off after five years, and $12,000 better off after 10 years switching to P&I.”
Read More: Home Loan Guide to Brisbane
4. That’s it for now
Overall the Australian property market is looking steady for 2019 and we’re looking forward to seeing you all in January!