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What's in store for property in 2015

John McGrath
Tuesday, December 16, 2014

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By John McGrath

After such incredible price growth in Sydney in 2013 and 2014, I’m expecting the market to slow down in 2015 but not go backwards. 

I believe Sydney has between 10%-20% growth left in it this cycle over the next few years. Periods of ups and downs are to be expected, particularly after a big surge in prices, so next year we might see some months where median prices rise and fall - fuelled by share market fluctuations, economic factors and interest rate movements.

Brisbane is different – it’s only just beginning its recovery and while we probably won’t see major price spikes like we have in Sydney, I am expecting consistent growth in South-East Queensland in 2015, particularly as more investors, owner-occupiers and foreign buyers look beyond Sydney for more affordable opportunities. 

Why prices will rise in 2015 

Talk amongst the big four banks of an expectation of one or two more official rate cuts next year will directly impact the market.  It’s important to remember that rate cuts indicate a slowing economy, so you need to be careful with major financial decisions. If you are very secure in your employment then further reduced rates will provide an exceptional opportunity to invest and/or pay down debt. 

Australia’s education, lifestyle, economic and political stability will continue to attract foreign investors and owner-occupiers.

  • A surge in new apartment developments in Sydney and Brisbane will increase supply but it appears demand will be ample to meet it – at least in 2015.  New product often pushes prices up and sets new benchmarks for apartment values across the board.
  • Prestige property is yet to have its first major run in this boom period. Banking and finance executives are once again receiving bonuses and upgrading their homes and ex-pats are returning to buy – even if they don’t intend to return to Australia as yet. 
  • The ongoing trend in using self-managed super funds to invest in property will continue.  Australians are still getting their heads around running their own super but the great thing is it’s providing funds to people who might otherwise not be able to invest, particularly younger Australians. 
  • Australia’s underlying housing shortage, coupled with ongoing population growth, will continue to underpin property prices and growth. 
  • Cash and term deposits have become unattractive compared to the reliability and safety of bricks and mortar long term. Share market losses in the global financial crisis remain fresh in people’s minds and the property boom has reminded them of the power of capital gains
  • Record low interest rates and strong rents are giving investors a rare opportunity to invest in major capital cities at close to neutral or even positive gearing. It’s a phenomenal opportunity to pay more into new loans during their most expensive phase – the first five years when you’re paying much more interest than principal 

It’s been an incredible year in real estate and there is much more excitement to come in 2015.  I wish you and your friends and family a wonderful Christmas and a prosperous new year. 

If you’re considering selling in 2015, it’s never too early to begin organising market appraisals with your preferred agents.  This will give you time to make decisions over the holiday break before the next selling season kicks off in February. 

Published: Tuesday, December 16, 2014

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