If we look back to the 2007/8 worldwide economic collapse there was only one country in the Western world which evaded the dreaded recession. Australia managed to avert negative economic growth during these difficult times and the property market went from strength to strength. In many ways it was the massive investment in the mining industry by Chinese companies which kept the economy afloat but there has always been significant interest in Australian property. So, what is in the pipeline for the Australian property market?
Who called the top too early?
For some time now so-called experts have been calling the top of the Australian property market suggesting areas such as Sydney, Melbourne, Brisbane, Adelaide, Canberra and Hobart were well overvalued. Indeed there was even a suggestion that overseas investment was pushing property prices to unaffordable levels and there would eventually be a crash. While there was a reduction in property prices in the first quarter of 2016 those who were wringing their hands gleefully are in for a surprise!
If we look at the state capitals across Australia each of them but two registered an increase in property prices in the second quarter of 2016 compared to the same period last year. It was only Perth and Darwin that saw property prices fall by 1.7% and 0.7% respectively.
Sydney property prices
In September 2015 the median cost of a house in Sydney hit an all-time high of AU$1,032,899 before slipping back below the AU$1 million level in the first quarter of 2016. However, an increase of 2.4% during the last quarter saw the median price again break the AU$1 million barrier and it now sits at AU$1,021,968 (however the annual growth rate fell to just 1.2%). The rate of increase in property prices is now at a four-year low but there is growing speculation that increased investor interest in Australian property could see this upward trend from the second quarter of 2016 continue.
Melbourne property prices
While Sydney property prices are just below their all-time high the median house price for properties in Melbourne has hit a new all-time high of AU$740,995 after a 1.5% rise in the second quarter (an increase of 7.4% over the year). This is the 12th consecutive quarter of growth in Melbourne property prices with many suggesting the market is still very robust due to increased investor confidence. It will be interesting to see how the price of property in Melbourne performs in the short term as it is dangerous to take one quarter in isolation.
Brisbane property prices
The median house price in Brisbane now stands at AU$521,915 after a 1.2% increase in the second quarter of 2016. This equates to a 4.3% annual increase which is an extremely good performance especially when you bear in mind the worldwide economic challenges. Brisbane is an interesting property market because while the median price of houses increased there was a fall of 1.8% in the median property unit cost in the second quarter. This would suggest there is significant demand for houses and less so for other types of property.