Although the market has softened, Australia’s residential property market is currently valued at $7.6 trillion and remains the backbone of Australia’s wealth, according to Matt Lahood, CEO of The Agency.
Given the market decline, Mr Lahood said that property ownership should not be viewed as a short-term objective — and then the property cycles are more easily put into perspective.
“As of November 30, 2018, the combined capital city home value index dropped by 5.66 per cent from the same time last year, but over the 2012 to 2017 super cycle, the combined capital city home value index rose [by] 47.3 per cent,” the CEO said in The Agency’s summer 2018–2019 property report.
Mr Lahood quoted CoreLogic head of research Tim Lawless’ stats on Australia’s premier property cities. Sydney, after rising by 75 per cent, has returned to September 2016 values, and Melbourne, after rising by 58 per cent through the super cycle, has returned to March 2017 levels.
“These adjustments are not surprising given the period of growth in these two capital cities overran expectations,” said Mr Lahood.
“[The] three remaining capital cities did not experience the meteoric price increases of Melbourne and Sydney.
“Perth has experienced an annual value decrease of 4.19 per cent, Adelaide an annual value increase of 1.42 per cent and Brisbane — including the Gold Coast — an annual value increase of 0.19 [of a percentage point].”
Mr Lahood also made the point that this cooling period is very unlike the GFC of 2008.
“Unlike the GFC, there are still active buyers in the market, but the decreased clearance rates continue to reﬂect the price expectation divide between vendors and purchasers.
“The other constraint for keen home buyers is the lending criteria changes, which have created uncertainty. Reforms have been required within the financial services and superannuation industries, but financial institutions and government are still finding the right balance when it comes to these lending corrections.”
He said that there are pockets in each of the core markets that are bucking the trend.
“There are great opportunities to be found for both buyers and vendors, but it will take a little more negotiation and time. Off-market and private treaty sales are on the rise, but post-auction clearance rates remain high,” Mr Lahood said.