What direction are the markets taking now?

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    • #23708
      PK Gupta

      A little over a month in to the new year and it already seems that property markets are trending in directions in accordance with forecasts we shared last November. Adelaide, Brisbane and Canberra are holding firm with mild growth, Perth has finally hit the bottom, Sydney is rising swiftly in some premium areas, Melbourne is rebounding off the bottom, Darwin is horrible, and there seems no stopping Hobart’s leading in growth rates.

      Reasonable national jobs growth, interest rates which look likely to drop even lower, still tight credit standards, and population growth that is among the highest in the world maintains a rock-solid floor for Australian property markets. But, as anyone who knows anything about anything knows, Australia is an extremely diverse country with no two cities doing the same thing at the same time.

      Sydney has now produced fours consecutive months of good price movements while Melbourne appears to be following the same trend with its median house price growing in each of the last two months. It’s time for Sydney and Melbourne investors to make big decisions; will these green shoots continue, or will they plateau like the seven years after the 2002 boom?

      But my analysis shows some very encouraging signs in several non-capital city markets. Industry sectors such as advanced manufacturing, agriculture, education and health are generating improved local confidence, new jobs, and demand for housing in a variety of regional locations. In a majority of cases, property prices have been flat in these locations for some time however, recent tightening of vacancy rates and increased buyer activity is applying local pressure.

      I have bought in one such regional location. I personally purchased a property for my own portfolio in this location for $235,000. We are as excited about its near-term outlook as we’ve ever been about a new location.

      With the focus on having a minimal impact on annual cash flow while targeting long-term capital growth potential and minimising investment risk, I sometimes prefer to adopt a small-fish-are-sweeter investment strategy.

      Interesting and exciting months ahead, but in times like these you can be eaten alive by the volatility of the market. Stay close to the fundamentals; and I don’t mean spruiker metrics like population growth, construction activity or unemployment!

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