Taking stock of property prices, January 2019

Finally, January is coming to an end, a month of celebration, relaxation and Australia day BBQs! There is a lot to celebrate in our beautiful country, like low unemployment, independent regulators and great economy. But there is one indicator that is either great or not so great depending on who you ask. This indicator is property prices. If you don’t own a property, the current pullback in property prices could be a relief and a chance to get into the market. If you own a property, you might not be very happy with the paper reduction on your property value.

Sydney market update

Sydney market has declined about 10% since the peak. Property values in our harbourside city have dropped almost 1.1% over month of January. Clearance rates remain low, and the fact that a lot of real estate agents don’t declare sale prices leads us to believe that the market will continue to decline in the near future.

Sydney property prices continue to decline

As we have indicated before, we believe Sydney property prices will continue their downward trajectory. Unlike many other commentators, we don’t believe that Sydney property will “crash” or fall beyond normal correction. We continue to believe that if the property fundamentals stack up, the property is in the right location and has owner occupier appeal it will outperform Sydney property market in general. There are markets within markets in Sydney and investors should analyse their particular situation rather than blindly follow headlines.

Melbourne market update

Melbourne property market has declined about 8.5% since the peak. Property values in our cultural capital city have dropped almost 1.38% over month of January. Clearance rates remain low, and the fact that a lot of real estate agents don’t declare sale prices leads us to believe that the market will continue to decline in the near future.

As we have indicated before, we believe Melbourne prices will accelerate their downfall soon. We have been correct in our forecast. As we have indicated, in this property cycle, Melbourne property market closely follows Sydney with some time lag. Melbourne property prices will continue their downward trajectory. Similarly, to Sydney, we continue to believe that if the property fundamentals stack up, the property is in the right location and has owner occupier appeal it will outperform Melbourne property market in general. There are markets within markets in Sydney and investors should analyse their particular situation rather than blindly follow headlines.

Melbourne Property prices are accelerating in their decline

Brisbane market update

The river city. It is often overlooked because it is… uneventful. I am not talking about Brisbane bars, beautiful parks and amazing food. Brisbane property market is relatively stable overall, this city is like a train, it is steady and unshakable. Brisbane property market remained relatively flat over January with a very modest, uneventful decline of about 0.2%. We will continue to monitor Brisbane property market. We have indicated before, and we were right, that Brisbane property market is unlikely to see a major correction. Our thesis remains the same. We believe Brisbane is likely to remain relatively flat, with a modest decline if any in 2019. We expect good news for Brisbane in start of 2020 when a large amount of local infrastructure spending comes to life.

Brisbane property market remains resilient

Adelaide property market

The city of churches is fairly similar to Brisbane. Over January Adelaide property market has remained relatively flat. Declining slightly more than Brisbane property market of almost 0.3%. We believe there is a lot of support provided in Adelaide property market by a pipeline of defence and state spending. Adelaide economy is also adjusting fairly well towards a more future, green economy. Though the extent of impact on property values remains unclear. We don’t believe we will see significant declines in Adelaide and we do believe that Adelaide property will remain fairly stable throughout 2019.

Adelaide property is supported by a number of large projects

Perth property market

The western capital property market has been beaten up in last few years. A lot of people do not even consider Perth property as an investment choice. We however, believe otherwise. We are seeing stabilisation forces that are starting to support local property market. According to our analysis, Perth property prices are fighting to stabilise and are starting to find their bottom. Decline in January was still a fairly decent 0.7%. However, we are seeing that this decline is starting to lose momentum.

Our thesis is that Perth property will find its bottom in 2019 and set this city up for a much better year ahead. A number of variables will need to line up for Perth property to increase, this includes an orderly slowdown in China and support for mining industry, which makes Perth property market very hard to predict. We are keeping an eye on this city as well.

Perth property prices are starting to stabilise

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