Property is always a hot topic in Sydney. We asked property expert Jamee Jenkins of JPC Property to give us his view on the residential property outlook for 2016.
The past three years have seen fantastic price rises for the Sydney property market. People who purchased prior to 2012 have experienced significant value increases over this period, with 2015 showing double-digit growth.
Looking at the history of the Sydney housing market these gains simply can’t continue and the December quarter saw Sydney’s median price drop 3.1 per cent.
This year started with a small number of auctions, significantly down on previous years. The clearance rate on Saturday 30/1/16 was down from the 2015 highs of more than 80% to roughly 43%. But the real picture of auction clearance rates and the market generally won’t be known until everybody is back in work-mode at the end of February.
It’s summer and Sydneysiders are in holiday mode, but it has been a weak end to 2015 and a weak start to 2016.
So what is the outlook for 2016? How will the Sydney property market react? Will it go up, down or sideways?
With banks clamping-down on lending, already high house prices, uncertainty over China, turmoil in the share market, slowdowns in auction clearance rates, price drops at the end of last year, the decision by the Reserve Bank’s at its first meeting in February 2016 was to leave the cash rate unchanged at 2.0 per cent. Their view is that this will help stimulate the economy and garner less interest from foreign buyers.
There is a possibility of 2016 becoming an election year, adding to general uncertainty which means 2016 is shaping up to be a year of limited growth.
Due to these factors, investors are expected to play the waiting game; pull back, see where the market lands this year. The economist at the National Australia Bank has also advised that forecast growth in Sydney will be slow or at a standstill.
Good news for buyers
However, a cooling market is good news if you are looking to buy. The uncertainty will filter through to the market and enable less competition, allowing more time to select and negotiate with vendors. Vendors are expected to have to work harder and adjust their expectations.
But, just like the broader economy, there won’t be one rule for the entire city. Different suburbs will be affected differently. This is where careful property and suburb selection comes into play.
Well located properties in inner city locations, or close to transport, schools, employment, shopping, government infrastructure projects and growing regional cities will help create demand in a cool market with limited housing on offer.
Properties that are poorly located; away from transport and schools, or areas that have large new housing supply will find little love. The same goes for those properties located on or near noisy/busy roads and also areas with limited access to employment opportunities.
For most people, property investment is a long game. People should keep this in mind when buying. Careful consideration of your reasons, objectives and outcomes of why you are buying need to be well worked through prior to purchase.
Each direction could produce a different outcome.
Why are you looking to buy? What result do you want?
Jamee Jenkins can be contacted at JPC Property.
email@example.com or 0403 679 778