2015 has been an exciting year for real estate, with continued low interest rates and strong buyer confidence resulting in record auction clearance rates and double-digit percentage price rises.
This highly-competitive sellers market started to slow in September, and the year ended on a more balanced note. It is this more balanced market that we expect to see continuing in Sydney in 2016, with buyers and sellers on a more equal footing. Most property analysts and commentators believe that 2016 will still slightly favour sellers, with prices expected to continue to grow but at a much more moderate rate. For example, in the latest edition of Housing Boom and Bust Report, SQM Research predicts average capital city dwelling prices across Australia will rise between 3% and 8% for the 2016 calendar year and Sydney is predicted to rise between 4% and 9%. This is down from the Australiawide average of 9.8% in 2014/15, but still a long way from a ‘bust’ scenario. The Domain Group State of the Markets Report similarly predicted a slow-down in growth to 4% per annum in Sydney.
The continued strength of the Sydney market into the New Year is partly due to interest rates staying at a record low, but is mainly driven by the fact that there is still a relative shortage of stock on the market compared to buyer demand. In a heated market, some potential vendors hold off putting their property onto the market because they are worried they won’t be able to buy their next property and don’t want to be out of a market that is rising in case they can’t then afford to buy back in. The knock-on effect of this is that as the market cools slightly and buyers are more confident, we often see stock levels increasing which in turn may well tempt investors and first home buyers back into the market.
From our own market experience, we know that there are still many serious buyers out there, some of whom have missed out on properties they wanted, or are waiting for prices to be right or for the right property to come onto the market. It is for this reason that we are expecting a very positive start to 2016. We would encourage anyone thinking about selling to start getting your property in order during January ready to go on the market early in the new year to take maximum advantage of the buyer backlog.
If you are looking to buy in 2016, the questions are always where will give you the best lifestyle and/or the best growth potential. Home buyers’ decision-making is often based around schools, transport and lifestyle, whereas investors are less tied to a particular location and will be looking for capital growth or positively-geared rental returns. Many forecasters are recommending investment in areas outside capital cities, in particular regional centres, or suburbs with new infrastructure or facilities that will drive market growth.
The Domain Group State of the Markets Report identified its Top 10 Sydney suburbs with expected growth rates of between 5% and 10% as: Tregear, Minto, Chester Hill, Engadine South, Tempe, Cromer, Chatswood, Lane Cove, Woollahra and Maroubra. On our home turf, Chatswood and Lane Cove both have some superb new developments coming through, as well as traditional family homes. Chatswood in particular ticks all the boxes for owner-occupiers and investors alike with quality schools, great transport infrastructure, major shopping centres and leisure facilities.
Our sales team would be delighted to talk to you about opportunities in the area. If you are thinking about selling, buying or investing in 2016, give us a call and we’d be delighted to help you make a positive move in 2016.