OUTLOOK FOR 2016
“Record low interest rates will be maintained for 2016, there is nothing in the reserve bank outlook suggesting otherwise,” says VZ Real Estate Managing Director Michael Verstandig. “Chinese growth is also slowing, which could leave the Australian economy vulnerable. However, the transition to the non-mining economy looks on track with household spending, retail and construction all holding up and without the risk of high inflation.”
“This helps maintain affordability in South East Queensland – people can still borrow without a great fear of being smashed by the banks increasing rates. Low interest rates certainly help make property more attractive,” says Mr Verstandig.
With the Australian Prudential Regulation Authority (APRA) changing their banking regulations, banks have raised their interest rates for investors. While this had certainly cooled the investor market towards the end of 2015, Mr Verstandig doesn’t think it will affect the market too much.
“I think the property investor will get used to the fact that they will have to pay a slightly higher interest rate, however, still at record lows. It won’t slow the flow of investors down in the South East region too much,” says Mr Verstandig. “Property here still represents good value, especially when compared to Southern capitals.
Mr Verstandig predicts that the investor market will remain solid and that rental returns in outer lying areas such as Ipswich and Forest Lake will be strong. “There are some good developments and investor opportunities in those areas. The Manly area also remains strong for investors, as well as the Redlands area. Anything that has multiple lots has multiple buyers,” says Mr Verstandig.
First Home Buyer Market
Despite the housing bubble in Australian cities like Sydney and Melbourne, affordability in Queensland is still quite good – certainly in South-East Queensland. There are a number of opportunities for first home buyers in a lot of areas across the South East - buyers just have to move further from the city than they would like to in their initial home owning phase.
“The closer you are to the city or the higher the socio-economic area, the harder it is for a first-time home buyer to get in. If a first home buyer is prepared to travel there are some incredibly affordable properties in outer areas that provide a good living experience and good opportunity for capital growth,” says Mr Verstandig.
Queensland growth was disappointing when looking at predicted forecasts for 2015, however, there was still growth up to 5% in some areas. As for 2016, there is strong market growth predicted for Brisbane over the next 12 months. A report from Domain (http://www.domain.com.au/news/the-brisbane-suburbs-expected-to-grow-in-2016-20151214-glmzjr/) named suburbs such as Everton Park in their top suburbs for growth in Brisbane.
Although the property market is still strong in Melbourne, Sydney is nearing the end of their run. Auction clearance rates have fallen away, with VIC sitting on 88% and NSW on 75% - dropping from the high 90’s. QLD is still sitting around 30%. Mr Verstandig explains this as meaning that although the property market in those areas are still running hotter than the South East, it will soon catch up. “I think the South East will catch up at some point because the fundamentals are there – rental returns are strong, low interest rates and strong demand. Number of sales have also increased, which is always an precursor to price rises”, he says.
“If you compare Brisbane to other major cities, Brisbane real estate is very affordable. Demand may be slightly lower at the moment, but as this increases so will prices,” says Mr Verstandig.