After a period of change to the property market late last year, the market has settled into a ‘new norm’.
This being the case, we have engaged two Noel Jones directors to obtain their perspective on how the market is tracking, and what they think is fair to expect in the coming 3 quarters.
Troy Sheehan, director of Noel Jones Blackburn states, “the past six months saw buyer demand decline drastically, and a lot of this can be attributed to the royal commission. We then noticed a flow on affect to the prices that properties were achieving when sold.” The findings of the royal commission were handed down on 3 February 2019, and Troy said that since then, there appears to be a steady flow of people coming back into the market.
Troy also touched on the upcoming federal election that is expected to take place in May. Both major parties have announced tax policies that will significantly change the Australian tax landscape. “If Labor emerges victorious, we will see some substantial changes to the negative gearing of property, and also capital gains tax (CGT).” said Sheehan.
Labor has confirmed however that all investments made prior to its policy implementation will exist under the rules of the current policy, meaning that you can continue to negatively gear existing investments in the same manner that you always have, and rates payable on CGT will remain the same for all properties that were purchased before the new policy is implemented. Troy believes that new investors will come to market sooner rather than later, so they can take advantage of the existing tax rules, incase there is a change in government. “However that may also see some current investors cash out of the market based on the uncertainty that may be faced for a period should new policies be implemented.” said Troy Sheehan.
Christopher Joye, a columnist for the Financial Review wrote an article published on 1 February 2019, predicting outcomes for the property market based on each party winning. In relation to a Liberal party win he said he expects the accessibility of credit to improve, and housing conditions to stabilise. He also believes ‘investors should pile back into the market to pick up cheap assets’ once Labor’s proposed taxes are no longer a threat.
Matthew Scafidi, director at Noel Jones Mitcham agrees that the back end of 2018 saw a huge adjustment to the property landscape, with buyers being the first ones to adapt to the redefined marketplace, and agent expectation being a close second. Matthew said “as is often the case, vendors were the last ones to make the adaption. It’s hard to explain to a vendor that their home that may have fetched a million dollars three months ago, is likely to now sell for $850-$900K, but sadly this is the nature of a declining market.”
“Now the market has stabilised, it’s been pleasing to see buyers coming back to the market. We are seeing solid numbers at opens, many back into double digits which was something we were not seeing towards the end of 2018.” Matthew also said it’s interesting to note that a lot of the people his team are meeting at opens are new buyers, with approximately 40% of them new to the Noel Jones database.
Matthew believes that 2019 is the year to buy if you’re looking to get into the market; he also says this is the ideal time to upsize or upgrade your home. He advises “whilst you may get less for your own home than you did in the peak of the market, prices for premium houses have also declined. If your million-dollar home is now fetching $900k, you have $100k less in your pocket. Calculate a 10% decline on a home that might have fetched $1.5 million previously and you’re looking at paying around $1.35 million.” Scaffidi continues “with potentially less competition for high end properties, you may find the savings will be even greater. On top of this saving, you’ll also be paying less stamp duty on the new home, and less in agent fees to sell the old one.”
Key points to take away are:
- The market has settled since the royal commission findings were delivered
- Buyer, agent and vendor expectations are now more aligned again
- Numbers are up at open for inspections
- There’s a mix of new and existing buyers exploring the marketplace
- It’s a great time to upsize or upgrade your home
- The May government elections will see a significant change to the Australian tax landscape
There’s never a dull moment in real estate and we’re looking forward to seeing what the rest of 2019 has to offer. Team members at any one of our 10 Noel Jones offices are on hand to help with any property-related queries.