What will go up (and down): Expert predictions for Spring property season
As we head into the busiest time of the year for property, Spring, there are many recent and upcoming changes that could set up the next three months for success for buyers.
First up, the Australian Prudential Regulation Authority (APRA) removed the 7% interest buffer, which means that banks can only test a borrower on their ability to repay a loan on an interest rate 2.5% higher than the rate they’re charging. For a borrower, that means they’ll likely be able to borrow more and that will ultimately feed into the property market.
We also saw a couple of RBA rate cuts a few months ago and I believe there will be another cut in October or November - another encouraging sign for both buyers and sellers alike.
Overall, I think we’ll see a positive, much-needed boost for buyers and sellers across the country.
As these new changes coming into effect, I expect Sydney will have an increase from now until the end of the year. We’ve already seen this start to play out with clearance rates running at 70% and over the last weekend (31st August - 1st September), we had an 80% clearance rate, which hasn’t been seen since 2016.
I predict Sydney will have an increase of around 3-4% from now until the end of the year.
Although Melbourne had a significant drop of around 11% from its peak, it’s still a city with strong population growth and an even stronger first home buyers market. With that said I believe Melbourne will come back over this quarter and have an increase of around 2-3%.
I have a good feeling for Brisbane even though they’ve been struggling for quite a while. They’ve had an oversupply of units that I now think is coming to an end, not to mention that their vacancy rates are also looking good and that’s for both apartments and houses within a 10km radius of the CBD. Overall, I think we’ll see an increase of around 3-4% for Brisbane.
Adelaide always proves to be a city of consistency and has been performing well every year with a price increase of 3-4%. But for the rest of the year, I expect it to continue to increase but at a level of around 1-2%.
Perth has been my biggest surprise overall and unfortunately not in a positive way. I had hoped for a rebound this year but it’s just continued to drop. And that could be due to the state of the home loan market and change in credit criteria. But this downward trajectory has been going on for years and I believe it’ll now come to an end, so I’ll say a 1% increase for Perth until the end of the year.
Hobart was the star performer last year with an increase of 12%, but this also carried on at the start of the year and has been up 5-6% ever since. However, I do think Hobart has reached the end of its run and that prices won’t go up any further than 2%. It’s important to consider that Hobart doesn’t have population growth like Sydney or Melbourne and now that the boom has come to an end, I expect there to be no movement in the market for years after the end of this quarter.
But Hobart does have low vacancy rates, which means it’s still a good place for investors to make a move.
So whether you’re an investor or a first home buyer on the hunt for the right home loan, be sure to check out our home loan comparison tool, which compares over 500 loans from more than 80 lenders.