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Housing Market Forecast: Your Guide to Buying Property in 2019

clock icon December 10, 2018
tag iconBrisbane Property Investing in Property Sydney Property Tips Buying Property

Australian home buyers have an abundance of opportunity heading into 2019.

We have all seen the slow decline of housing values across the country, mostly due to an oversupplied market, tighter lending conditions, and a general market correction.

While recent headlines hint that we are heading into some kind of ‘doom and gloom’ scenario, there is one group that benefits from current conditions – first home buyers.

First home buyer lending increased nationally by 28.4% in the past year, with New South Wales and Victoria leading the charge. This is hardly surprising, given our least affordable states are now beginning to soften in pricing.

Sydney housing forecast

Photo of Sydney housing market

Dwelling values in Sydney had a significant drop in the past year, declining by 8.1%. This downward trend seems likely to continue into 2019.

This is a welcome change for Sydney buyers that have been gradually priced out of the market for several years.

Given this, first home buyer lending in NSW is already up 74% over the past year, according to QBE’s housing outlook. First home buyers are flooding back into the market, with the Sydney median house price slowly getting within their reach.

We suggest making use of stamp duty concessions to assist with the cost of the purchase price:

  • Homes or apartments valued between $650,000 and $800,000 are the sweet spot –  the perfect choice as they become more available.
  • Consider the outer suburbs and areas surrounding your desired location

Brisbane housing forecast

Photo of Brisbane housing market at sunset

Meanwhile, housing values in Brisbane have remained relatively flat and have avoided the pinch many capital cities are feeling.

Reasons behind this include population growth, complemented by the increase in migration from other states. This is no surprise, given Brisbane offers the most affordable housing on the east coast.

People are realising the opportunities going forward, with median house prices forecasted to grow by 11.3% over the near few years. However, be wary of the oversupplied unit market.

For any prospective buyers, first time or investor, keep the sunshine state in mind.

Check out QBE’s housing outlook if you are interested in the rest of the market.

The broader picture looks good

Since this time last year, national dwelling values are down 4.2%, with most of the downward pressure coming from the obvious culprits, Sydney and Melbourne.

Despite a long-term positive outlook for most major capital cities, this pressure will continue to push down the national average at least into 2019.

Banks have become more cautious in their willingness to lend, and mixed in with softening housing values, the market will be under pressure. Fortunately, things might not be as bad as some doomsayers may suggest.

The Reserve Bank announced last week that they will leave the official cash rate on hold at 1.5% just in time for Christmas.

The RBA’s commentary suggested there was no need to make changes, highlighting a strong labour market and stable inflation as some of the indicators that will support our weaker housing and credit conditions.

Australia's forecast housing growth 2018-2021
Australian median price growth. Source: QBE Australian Housing Outlook 2018-2021

Will housing prices crash or recover?

Even with positive economic indicators across the board, there are those that say we are only at the beginning of a housing crash.

Some forecasts predict a disaster scenario, others point out the market stabilising itself in a couple years. All have merits and pose for some interesting discussions to be thrown around at Christmas, but in reality, no one can perfectly predict what will happen.

Australian’s housing boom lasted several years, so it’s fair to say a correction had to come sooner rather than later. As with all markets, they work in cycles with both peaks and troughs experienced. The market will make the necessary correction then begin to rebuild as it has previously.

Thinking long term

A major investment like a home or property is something you’ll want to hold onto for 10, 20, or even 30 years.

Therefore, you should always consider the long-term outlook of the market. Think of key drivers like population growth – housing demand will need to keep up with our growing population.

The founder of Successful Ways, Scott Durrant, has been in the industry for over 15 years and has seen this happen multiple times. He highlights that property is a major long-term investment and you should enter this process with that in mind.

As a home buyer, you’re not going into the market with the intention of selling in the next few years. Something that Scott believes is the key to successfully entering the market is:

“The time to buy is when the banks will lend to you”

Deciding on when to enter the market can be a difficult decision, but trying to time the market will lead you nowhere. Are you ready to make this commitment on a financial level?

How do you prepare yourself if your New Year’s resolution is to a buy a property in 2019?

New Year fireworks Sydney housing

Preparing yourself to buy property in 2019

2018 has been an interesting year for property. National housing prices have dropped, first home buyer lending is up, and we’re all sitting here waiting to see the final report from the royal commission.

Beyond the impact of the commission’s policy recommendations on the property market (expected early next year), we can expect a few other things to change – interest rates, availability of credit, and market shifts post-election.

It is hard to predict the market, but understanding current trends will put you in a better position. The new year isn’t far away, so start considering your options now.

1. Identify a goal

Your New Year’s resolution needs to be specific if you want to achieve your property goals. We all know how important it is to have objectives to reach our end goal. Moreover, they should be specific enough to keep you heading down the right path.

Work out what you want to buy, where you want to buy and give yourself a time frame. A specific goal would be something like:

  • “Buy a 2-bedroom apartment in the inner-west of Sydney by April”
  • “Purchase a 3-bedroom house as an investment property in one of Brisbane’s growth areas by June”

Go that step further and narrow down your search to a specific suburb.

2. Be ready to act

Procrastination is the enemy of success. If you want to make the most of the current market, don’t dawdle. If you are buying a property with a partner, make sure you are both on the same page and are equally motivated.

The key is to sit down, figure out what you want, and then start doing your research. Property is a major investment, so you should have a clear understanding of the market and the area you are considering.

Keeping this in mind, you may be able to find a more affordable option by investigating surrounding suburbs with a similar lifestyle.

  • If you are buying a property as your own home, consider which suburbs will be convenient for you in terms of your lifestyle and whether you need an apartment or a house.
  • If you are looking for a property investment, you’ll need to consider properties that meet your investment strategy, have good capital growth potential and are easy to tenant.
Piggy bank savings to budget home

3. Set a realistic savings budget

Property is no small investment. If you’re planning to buy, you are probably going to be seeking out a loan. Therefore, set yourself some good saving habits. For first time home buyers, this will be more relevant going into 2019.

Start by making a list of your expenses. It’s important that you are realistic. Make a comprehensive list and understand where your money is going and where you can cut back if necessary when you get a home loan.

Availability of credit is already tight, and we expect changes to lending criteria next year. We’ve noticed lenders become increasingly thorough when looking through client expenses.

Our advice:

  • Be aware of how much you are spending on things like entertainment or your enthusiasm for takeaway food – ask yourself if the expenses are justifiable (or your lender will)
  • Keep yourself on track by setting a savings target and review this every single month. This comes back to the importance of being specific.

4. Get your finances organised

With your savings sorted, it is time to get the rest of your finances in place. Make sure you know your income and expenditure, plus how this will tie in with your future goals (such as your career and family).

When making such a large investment, the help of a professional can go a long way, so speak with your bank or mortgage broker. They can help determine how much you can borrow and what you can afford.

Using an online mortgage calculator can help you figure out your borrowing power.

Save yourself time before you start your property hunt by getting pre-approval. This will make the later stages of the process run a lot smoother, removing unnecessary stress.

Shaking hands with mortgage broker

5. If in doubt, seek professional advice

Let’s face it, buying a property isn’t easy. There are a long list of services and people you must jump between before reaching that end goal.

From finding the right home loan, getting approval, searching for the property, building inspections, and the legal legwork (via a conveyancer or solicitor), the road to settlement can seem daunting.

Having a professional team on your side can make all the difference to your success, and probably your sanity. Successful Ways’ unique approach offers everything you need under one roof to help you buy that dream home of yours.

Begin your property hunt

To sum up, for those that have been locked out of the property market for several years, conditions are shifting in the buyers’ favour.

Remember, do your research, set realistic objectives, and become an expert in the area you want to live. Those who are organised have a greater chance of success.

Buying your first home and don’t know where to start? Come along to Sydney’s longest running first home buyers course. Now available in Brisbane. Book your seat today!

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