What to expect in our changing market – John McGrath

As I’ve noted several times recently, Australia’s property market is shifting. But this isn’t bad news, and nor should it cause you to panic.

I say this for one key reason: the bricks and mortar you live in, or rent out, is one of the greatest wealth-building assets you’ll ever own. This is why the Great Australian Dream of home ownership is still such a significant goal for Aussies.

Admittedly, news for the property market hasn’t been positive lately, with spiralling interest rate making life challenging for home owners.

But the one thing you can be sure of, is that property can be cyclical, where returns and values will move up and down over time. These changes are also usually due to unforeseen issues, such as inflation, geopolitical unrest – or a Federal Budget.

By all means, be aware of current news, but also study the past and consider the future.

Firstly, it’s true that capital city growth has slowed in the last quarter, especially in Melbourne and Sydney. Yet even these locations’ dwellings have only declined by a respective -1.5% and -0.9% in this period, according to Cotality’s latest Home Value Index. And in the past year, they experienced 2% and 4.2% increases.

Melbourne’s lower price growth and values is also due to its strong, ongoing supply of stock – a highly positive feature in its property market.

As well, Cotality pointed out that while every capital city recorded a slower pace of growth in April, conditions remain highly diverse across major locations. Hence, the “two-speed” market we’re reading about so much right now.

The Commonwealth Bank (CBA) talked about this market in late April. The Big Four lender noted that property conditions were uneven across our capital cities, with Perth, Brisbane and Adelaide growing faster than Sydney and Melbourne.

CBA senior economist, Trent Saunders, added that the Australian housing market has remained much stronger in the last few years than most people expected. Prices are unlikely to fall nationally, despite the recent slowdown.

“For markets like Perth, Brisbane and Adelaide, fundamentals remain strong,” he said. “We expect growth to slow, not reverse.”

NAB is another Big Four lender to highlight the positives in Australia’s very different range of real estate. In its latest Residential Property Survey, NAB pointed out that while housing sentiment eased in the March quarter, this pull back was only modest.

Overall buyer confidence is still highly positive with the first quarter’s decline following a strong rise over the past 12 months, while our major city locations featured a diverse range of buyer sentiment.

NAB believes the property market as a whole is changing from one of “broad-based acceleration to a more uneven, supply-constrained expansion”.

I hope these facts and figures help you feel more encouraged about your greatest asset, and better prepared for the next changes to impact our property market – and by changes, I don’t necessarily mean negative ones.

Most importantly, don’t panic about the current headlines. Instead, look to the long-term future of your property and what it will give back to you and your family.