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Whatever happens this spring to the Australian property market will dictate how it will move over the next 12 months, a property expert has claimed.
Typically, 1 September shows a rise of listings just in time for the warmer weather, but Australia’s property market of late has been anything but typical.
What will be a clear indication of how the market will move over the next 12 months are auction clearance rates, lending finance and the results of the next federal election, according to RiskWise Property Research and its CEO, Doron Peleg.
“Spring will help determine what the next 12 months will look like, although this will change if Labor wins the election. This looks likely following the recent insurgency on the former Prime Minister Malcolm Turnbull,” Mr Peleg said.
“What we are seeing at the moment leading into spring is that the volume of properties being auctioned in Sydney is going up significantly with preliminary auction clearance rates of 57.9 per cent [as published by CoreLogic on 27 August 2018].
“These are not the figures of a collapsing market. While auction clearance rates have slightly recovered, we don’t expect to see anything sensational, nor do we expect any significant price reductions.
“The auction clearance rate is a strong barometer of the market and we know at the moment prices are lower, which means it’s a buyers’ market and therefore more attractive.”
Mr Peleg also said that recent strong price increases in Sydney and Melbourne meant that many sellers have healthy equity and could refinance or look to other methods of selling their property if they had to, with the number of forced sales predicted to be very low.
“Vendors are well aware of the transaction costs when it comes to selling a property, e.g. agent commission, marketing, stamp duty. It’s not that easy to force a large number of people to sell, which is why we won’t see a huge correction in the market,” the CEO said.
“In addition, with all the scrutiny of lending applications, the price reductions we’ve seen following outstanding capital growth is actually quite modest. Dwelling prices went down by 5.5 per cent in the last 12 months.
“And while investor finance is at a low, still around 40 per cent, it means investors are still very much in the market. Yes, it’s dropped, but they are still there, and we know changes to investor activity do have an impact on the market.”
With the inevitability of the next federal election coming soon, the Australian public should be made aware of the major party’s policies on negative gearing and capital gains tax.
“It’s interesting to note that changes such as limiting investment to two properties per person will have only a small impact on the market” Mr Peleg said. “It sounds good and would be well received; however, in substance it will only have a minor impact on the market as the vast majority of investors only have one property anyway and can also plan in advance property allocation among family members.”
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