State of the Property Market 2014 Australia

It’s been a long time coming but Sydney and Brisbane are both showing great signs of recovery.

In other markets this year, Perth and Melbourne have done well with steady growth in 2013, Adelaide has remained subdued and Canberra is still dealing with the inherent challenges of a change in government.

At the end of the day, the big action is in Sydney.

There’s been some debate as to whether Sydney’s boom will continue in 2014 given predictions that unemployment might rise a bit further, the mining investment boom will continue to slow and several industries could remain stifled as long as the dollar remains uncomfortably high.

I remain optimistic. Low interest rates are really powering the real estate market now and there are still many buyers and sellers yet to come off the sidelines.

The ‘early adopters’ are out there now, trading property while they can still lock in a great fixed rate below 5% and while high demand is resulting in strong prices. Next year comes ‘the herd’, that large middle bracket of people that join in a trend after it’s been established for a while. Following the strong results in Sydney this Spring, I think 2014 will be their time.

In Sydney, the market began to turn in the late stages of 2012 and 2013 has been a fantastic year. Latest RP Data figures put Sydney’s median house price at $749,995 – up 14.3% for the year to November 30. The median apartment price is $547,500 – up 11.1% year to date.

People thinking of selling in Sydney have to weigh up the benefits of biding their time so their current property grows further in value against the fact that their next property is also going up in value at the same time.

For upgraders, it makes more sense to sell sooner. Say you’re upgrading from an apartment to a house in Sydney. Look at the stats. House prices are growing at a faster rate than apartments – 14.3% compared to 11.1%, so your next purchase is getting more expensive while your current home appreciates at a slower pace.

For people leaving Sydney for a regional area, you have a bit more flexibility in timing. Even though regional markets in NSW are already responding to Sydney’s lead, you will always get significantly better value for money in regional areas no matter when you move.

Let’s talk Brisbane.

Brisbane has all the signs of impending growth but it hasn’t hit its stride yet. RP Data puts the median house price at $456,000, up 3.1% year-to-date. Apartment prices are also up 3.1% to a median value of $375,000.

I’d say 2014/2015 will be to Brisbane what 2013 has been to Sydney. In fact, I believe Brisbane and the broader South-East Queensland market will outperform the rest of Australia – including Sydney, over the next three to five years as deleveraged seachangers, downsizers and retirees flock to the Sunshine State and investors take action.

The trend in self-managed super purchasing has barely begun in Brisbane and the Chinese market has not yet discovered Brisbane the way they have Sydney. These are two of the biggest drivers of Sydney’s current boom – wait til it starts in Brisbane where prices are coming off a much lower base.

Thinking back to the boom in the early 2000s, I remember the headlines screaming that Sydney’s median house price had hit $350,000. That was big news – $350,000 was considered an awful lot of money. Today, Sydney’s median has more than doubled and many people are saying the same thing: “Gee, that’s an awful lot of money”.

Use the Christmas holidays to consider what you want to do next in real estate. Early 2014 should be a time for strategic decisions. There is great wealth still to be made in Australian real estate and with interest rates so low, now is the time to make your next move.