The new year will bring three exciting market trends for Australian property as we move to more stabilised buying conditions in 2016.
Homeowners who have been holding off will find choice and motivation, as we shift to a more balanced playing field between sellers and buyers.
But it won’t just be those already in the market who will feel more confident.
Among those set to benefit will be first-time buyers, those living in tourist destinations and existing owners keen to renovate.
Better employment outlook, combined with the continued increase in listings and less competition from investors, is set to open new opportunities especially for those previously priced out of the market.
It could be that 2016 becomes the year of the first home buyer.
The construction boom across the country over the past two years will attract the under-30s who are happy to live in high-density inner-city hubs. These developments positioned close to transport, universities and entertainment will become affordable options.
Changes to investor lending are going to spur the first home buyer growth as they will no longer be fighting over the same properties. Investors who have bought off the plan will also look to be selling down, opening another option for first time buyers.
The emergence of the ‘rentvesters’ – young people who own an investment property but lease a home elsewhere – will start to disappear as owner-occupiers take advantage of the historical low interest rates.
Affordability will continue to be an issue in parts of Sydney, but recent price corrections in Perth and Brisbane will offer potential entry points for those looking to buy in 2016. A downturn in the number of investors in Melbourne will also free up a surplus of stock, in particular apartments in the CBD, for young buyers.
The tightening of investor lending will encourage renovating as homeowners look to increase the capital in their own home.
Adding value through minor work should become increasingly popular, and properties that offer scope for this are not likely to sit on the market for long.
People are no longer buying and staying put for 40 years, they are looking at different strategies to make money from their own piece of real estate.
Building granny flats for added income to help pay off mortgages remains popular.
Renovations could be the edge needed when it comes to re-selling. We are expecting micro-markets to emerge in most capital cities over the next 12-months. There will be suburbs that defy what is happening in the overall market.
We are already seeing examples of this in Perth, where homes in the north-west outskirts have fallen in value by around 40 per cent while inner-city suburbs enjoy gains.
We need to move away from painting the market with one brush as there are many factors that affect prices at a micro-level and much of this will depend on the supply-demand ratio.
The falling Australian dollar will also boost property sales in lifestyle and tourism centres, with the expected increase in both international and local holidaymakers. We are already seeing this in markets such as Byron Bay and Cairns, which should continue to strengthen in 2016. More local holidaymakers will also help to stabilise the short-term rental market, while the cheaper dollar is also expected to fuel expat buyer activity.
Grant Harrod has been chief executive of LJ Hooker since 2014. From 2009 to 2013, Grant was chief executive of Salmat. Before joining Salmat, he spent 13 years with Corporate Express Australia, where he served as chief executive for six-and-a-half years.
Grant has an MBA from Macquarie University’s graduate school of management and is a fellow of the Australian Institute of Company Directors.