Happy New Year and hope 2018 was prosperous for you all. Let’s hope 2019 holds some definitive direction for the property market.
I don’t remember seeing a confluence of factors that are having such a detrimental impact on the property market since the Global Financial Crisis in 2007-2008. There is some uncertainty in the international economies with Brexit, Trump and China’s Trade War, etc, playing their part in destabilising our economy and property market.
Our debt-to-equity ratios have likely all changed somewhat as well. The Banking Royal Commission, the financial services sector’s litany of errors and bad behaviour, combined with the tightening of the banks’ lending criteria to investors and restrictions to international property investors, has produced a bigger fall, particularly in Sydney and Melbourne, than most had anticipated.
Our area has not been excluded in these falls.
The strong increases in property values since the GFC have been proven to be unsustainable and we are now in the middle of a correction. When the correction is complete, we will likely see a period of consolidation which will establish a baseline of property values prior to the markets moving forward again.
Having said that, as with the GFC, the market, when it goes through a correction like this, usually recovers strongly once confidence returns to the market, so intrinsically now is probably the best buying opportunity we have seen for some time and when strength returns, it is often quick and hard to predict.
There is always strong demand for housing, particularly in the major capital cities. I know it is hard to see past the negativity during times like this, but it is all relative at the end of the day, and one buyer is also a seller and vice versa. If the sale price of your property now is 5 per cent or even 10 per cent less than the peak values at the end of the boom, your purchase price on a property is also going to have adjusted by a similar amount, so don’t despair.
It will be interesting to see what happens after the Banking Royal Commission once lending returns to normal and investors re-enter the market. The Reserve Bank is also hedging on the future direction of interest rates but, suffice it to say, they won’t probably change much either way. I expect 2019 to provide us with a level of clarity on where the market will head next and I think we are in for a few surprises.

Craig Gartlacher, Park Lane Property Group. parklanepropertygroup.com.au

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