The First quarter of 2012 is over so for my
Market Update this month I would like to on what has happened over the last 3
months and based on that data look at where the property market may be heading.
Let’s look at some of the numbers (source:
RP Data):
- 0.0% change in National House Prices for the first quarter of 2012
- National house prices rose by 0.2% in March 2012
- Sydney was the best performing capital city with an increase of 1.1% for March
- The number of properties on the market has fallen by 7.3% compared with late last year
- The vacancy rate for rental properties in Sydney is at a very low 1.6%, the lowest of any capital city
- Rental yields for Sydney are also strong, with a yield of 4.3% for houses and 5% for units
- The Auction clearance rates have consistently been above 50% this year
- Unemployment remains steady at 5.2%
- Interest Rates remain on hold
Sydney has clearly been outperforming the rest of Australia, but certain
segments of the market are still suffering from an oversupply of property
relative to the reduced demand. Suburbs within close proximity to the
city, transport, amenities and infrastructure are however performing well.
On the back of Interest Rate drops in November
and December 2011 and the prediction that most economists are making that
interest rates will drop again this year, all the data suggests that the
property market is beginning to stablise and hopefully this trend will continue
I agree that we are entering the stabilisation phase of the property
cycle, where buyers are returning and slowly taking up available stock, but not
really pushing up prices yet. I think property markets are likely to remain soft
this year, but should keep consolidating.
How soon things turn around will depend a lot on buyer confidence,
and this will depend upon what’s happening overseas, how our government
performs and what happens with interest rates.
The better than expected unemployment figures in March has weakened
the case for multiple rate cuts, but economists are still tipping the Reserve
Bank to reduce the cash rate by 25 basis points when it meets on May 1.
I know the ANZ increased its home loan rates by 6 basis points last
week but yesterday I read that the St George Bank actually dropped their 1, 2
and 3 year fixed rates. Their 3 year fixed rate is now 5.99%
Unemployment remains steady at 5.2%. The
data showed 44,000 jobs were added to the national economy during March, well
above economists' expectations for an increase of 5,000 jobs, while the
participation rate (those employed or actively seeking work) rose modestly from 65.2% to 65.4%. I
read last week that the number of jobs created during March was a 1/3rd
of the number of jobs created for the same period in the US.
If you are looking to buy it looks as
though now is the right time. If you wait any longer to see if the market drops
any further you may miss out. The only true way of knowing if prices have
bottomed is to wait for data to show that prices have actually increased, by
which time you will have missed the opportunity.
Autumn and Winter are a great time to sell.
If you are thinking of selling there are two things to consider. Statistically prices
are usually higher at this time of year for the very simple reason that stock
levels are often low and property being sold now will be competing with far
fewer other properties, as the number of buyers doesn’t seem to change though.
The other factor to consider is that if the
predictions are correct and as the market continues to stabilise. I think lots
of would be sellers will put their property on the market in the spring
creating lots of competition and potentially driving prices lower.
