The news of a housing downturn started emerging in November 2018, which was pronounced by the declining property prices in Sydney and Melbourne. The decline is considered to be the largest since the global financial crisis of 2008. According to CoreLogic’s house price index, the prices in the top segment of the property market have dipped by 7.2% in the past year. However, the bottom segment has shown a surprising surge in some cities.
The tumble can be majorly seen in the high-end homes of Sydney and Melbourne that were being sold at unbelievably high prices. The dwelling values dropped to 4.2% in 2018, but these values are mainly confined to Sydney and Melbourne. The reason behind this decline is primarily the tightening of credit standards which has put a brake on the investment sprint taking place in the two metropolitan cities.
The luxury properties for sale in Australia have been affected by these alterations as the most populous cities of the country enjoy a stronghold of the rich and the famous who love splurging on prestige homes. The investor activity in these regions has slowed its pace owing to the affordability issues that are being faced by the buyers. Another reason for the downturn is that the rental earnings from these expensive properties do not match the expectations of the owners. The restrictions on foreign investors have also played a significant role in keeping the big buyers away from active playgrounds.
How Is The Current Property Market Looking?
The supply hasn’t taken a back seat, and with the downfall in demand, the channels for negotiations have opened up. As was evident in the property auctions at the beginning of the year, a lot of sales took place after the show was over through price negotiations. The restrictions on mortgage credit are making the investors pay up to 20% extra from their pockets as the loan amount is now limited and the processing is taking a much longer time.
However, amidst all these plummeting statistics, a few cities have maintained an upward trend when it comes to house prices. Keeping themselves safe from the plunging valuations, Brisbane and Hobart have not been affected by what is being termed as a country-wide housing downturn. As price negotiations are ruling the roost, buyers are finding themselves in the centre stage of the dealings with an upper hand on the vendors.
Naturally, the lending conditions have made an impact on the million dollar transactions, but buyers with a will to expand their portfolio are looking at other options. With Brisbane and Hobart presenting a positive picture, the focus of the investors is now shifting towards these lively and bustling cities.
Regional Tasmania Outprices Perth
While Melbourne and Sydney prices crumble under the pressure of the price drop, Hobart’s median house price has been experiencing a big boom. The surge in demand and rates is not limited to the capital city. Even the smaller towns are witnessing an increase in the housing costs. With its economy progressing towards new milestones and offering a high standard of living, the beautiful state of Tasmania is emerging as a top choice among the high-net-worth individuals for purchasing a million dollar property.
Many investors from Melbourne are now reaching out to Tasmania which was once considered remote. The migration of skilled workforce, immigrants, and low-interest rates has inflated the demand further. Also, unlike Sydney and Melbourne, the houses in Hobart are occupied by the owners who are not affected by the credit crackdown. The median house price in Hobart has now climbed to $445,655 which is just behind Perth.
The state is considered rich by global standards. If it was a country by itself, it would have been placed at the 21st spot in the world in a GDP ranking list. With tourism bringing a lot of wealth into this picturesque city, Hobart has come up as a more affordable choice for investors. Another advantage of purchasing a house in Hobart is that the properties are independent houses or small units in the inner suburbs which offer splendid views of the mesmerising environs.
The holiday destination feeling makes it all the more exciting for the rich lifestyle seekers to settle down here. The rental yield is also increasing as many people are migrating to the state which has amplified the demand for rental properties. The newfound love for the striking city has made many developers take interest in this part of the country as many projects are being planned for its waterfront suburbs. The lavish appeal associated with riverside houses cannot be undermined and the possibility of these new projects being sold for the highest prices cannot be ignored.
Brisbane Housing Prices Growing Stronger
The vivacious city of Brisbane has continued to show a rise in its prices despite the major capital cities bowing down to the credit standards. Although the increase has been a meagre 0.2% in 2018, it cannot be challenged. The median house price in Brisbane has reached $493,568. The city is famous for its stand-alone houses which are termed legendary ‘Queenslander’ structures standing tall on stilts. Besides these, there are many luxurious apartments overlooking the Brisbane River and giving a taste of upmarket living.
Additionally, the gross rental yields of Brisbane are much ahead of Sydney and Melbourne which has ensured its domination in the property market. Many property experts believe that this growth will continue for another three years and the median house prices will climb by another 11% by 2021. The improving economy of Queensland and the inter-state influx of people along with the affordability factor make investing in Brisbane absolutely worth the money. Its highly stable luxury property market is now a more promising venture for the buyers who are planning to put their money into other properties.
What’s happening in Sydney and Melbourne cannot be considered as a national slump as every state has a lot of factors which decide the pricing of its housing sector. From the flow of immigrants and the state of the economy to inter-state migrations and tax policies, every state has unique elements that ascertain the prices. So investors can look away from the overcrowded cities to invest in the new property hotbeds of Hobart and Brisbane for maximum gains.