There’s no doubt that the outlook for Australian properties is looking grim. With just about every market showing slow or negative growth, it might not be the best time to get into real estate investing.
As with any property, a property valuation is always recommended for both the Sydney and Perth markets. As with any market, have a property valuer will reduce risk and identify potential revenues.
In general, the entire Australian real estate market is one that should be considered with caution.
Sydney Market Trends
Sydney is becoming somewhat of a challenging city for real estate investment. With pockets of both growth and decrease, it takes savvy and research to identify potential properties throughout the city.
On the upside, interest rates are heading up which is generally an indication that banks are confident the market is in recovery. This is positive news after the several years of record low real-estate losses.
Many are predicting an improved Sydney real estate market for 2017. Some reports are predicting as much as a 13% increase in city properties. However, many experts are predicting growth at slower rates.
The news of an improved Sydney Real Estate economy is somewhat of a controversial topic however, with many experts predicting both decline and increase.
Supporting the evidence of decline is the low amount of dwelling approvals in Sydney. Predictions show this continue to slip in 2017. Property research forecaster BIS Shrapnel showed a 6% fall in building commencements, which would be followed by further national declines in the coming year as well.
These trends and news has many investors exiting the Sydney market - at least for now. Seeking opportunities in other markets, such as Brisbane or other areas with perceived higher value.
Having further effect on the slow economy is the stricter guidelines of banks for mortgages. Lenders have become more prudent and strict both in national and international markets. This is making the market more expensive for investors.
Perth Market Trends
Perth in particular is fighting against the bubble burst of 2013, with different reports showing as much as a 9% loss to home values. According to sources, Perth has a median sale price of $760k, which represents a 13% decrease from last year. With higher rental prices of around $550 per week, this only represents a median gross yield of around 3.8%, lower than the national average of 4.24%.
As a result, many investors are shying away from this market in favor of more progressive markets where the local economies are showing some recovery.
This information conflicts with reports that came out in mid-2016 indicating the Perth market had bottomed out, implying the market would begin to see a rise. Citing confidence of local and national investors, these reports have been found to be inaccurate.
The Perth real estate market may be affected by a high unemployment rate of 6.3%, in addition to the local economy being marred by the end of the resources boom.
For those with capital this presents an opportunity. With home values decreasing, many available properties present potential for gains as long as investors can afford to out-last the downward trend.
Overall Australian Market Trends
The Australian Real Estate market has struggled primarily due to the recent market crash. Hailed as one of the largest asset bubbles in the history of capitalism, a review of the market will lead to no other conclusion.
Australian’s have a long history of commitment to home ownership, generally using this asset to structure their finances around. As a result, the market became over-inflated driving the GDP ratio to around 360% of actual. The result is overpriced, and over mortgaged homes which led to significant damage to the Australian economy overall.
However, reports are predicting a 10-13% increase in property values throughout Australia for the 2017 year. This news has some investors optimistic about future potential with many seeking properties in some of the more revived markets.
Revenue/Return Estimation Tool
If considering real estate investment opportunities in Australia, make sure you thoroughly research the area, identify potential growth, and current economical factors.
To calculate potential return on your Australian Real Estate investments considering using this return calculation tool.
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