2017 review: How the property markets in Australia’s capital cities performed

According to Charles: “[Change] certainly arrived early in places that are associated with mining and so on—whether it be parts of Queensland, Northern Territory.”

On the other hand, some markets continued to struggle and slow down.

“Darwin, in particular, had a pretty tough time … [as well] as Perth. But those other marketplaces continued to ride just a little bit longer. Sydney started to slow down but Melbourne continued to move forward,” Charles said.

Find out how some of Australia’s top property markets performed in 2017 and what could be expected of them this new year:

Melbourne, Sydney and Canberra

The Melbourne and Canberra markets moved forward and grew in 2017 because they had good and steady supply, according to Charles. Moreover, Melbourne saw some of the best clearance rates across the country as well as a significant number of auctions.

He explained: “Canberra's got suburbs they just keep opening when they need to and the Victorian Government were very proactive when it came to property release, [and] land release.”

“When you look at the pricing in Melbourne compared to the pricing in Sydney, it made Melbourne very, very attractive,” the property expert added.

During the last week of the year, Melbourne has a 67.3 per cent clearance rate with 1,628 auctions, while Sydney only has a 60.8 per cent clearance rate with 690 auctions.

In 2018, the Melbourne market is expected to settle down just as Sydney did after it saw a property boom.

Charles said: “There'll be some locations that'll come back in [previous median] price because they jumped way too high and I think you'll see what might appear to be negative growth—but it's not really. It's just an adjustment.”

“We've always said it before … There are only two types of markets that we're in … One where we get a buyer up to meet what they think is a vendor's ridiculously high price, and that's called a boom.

“The other [is] where we get the vendor down to meet what the vendor thinks is a purchaser's ridiculously low offer, and that's called real estate … That's what we're in 90 per cent of the time and, I think, we're coming back into real estate,” he added.

Queensland

The media predicted a boom in the Queensland property market in 2017, but Charles remains concerned about the significant oversupply in apartment sales in the area.

According to Charles: “When you get a lot of investors go running up there because the prices are good, you're invariably going to get a reversal of rent fortunes.”

“Then you're going to have a situation where vacancy rates are high … That's always a big concern to me,” he explained further.

Among the areas that moved strongly in the past year and did see a property boom or significant growth are Sunshine Coast, Melbourne, and Canberra.

Brisbane

Like in 2017, Brisbane will continue to offer a “very steady opportunity” to property investors this 2018. In the last five years, the prices of apartments only increased by 0.9 per cent while prices of residential houses have increased by over 25 per cent. In contrast, Sydney saw an increase of 75 per cent in its property prices.

“Those marketplaces, I think, got a little bit ahead of themselves when the New South Wales market was slapped with the exit tax on the Carr government and it stopped the prices of Sydney moving and Brisbane got a little bit too high,” Charles said.

According to him, while there are good opportunities in the Brisbane market, there’s no reason for property investors to rush into buying assets there. Moreover, it’s certainly not a good time to buy an off-the-plan apartment because there are still thousands of apartments due to be settling in the next two years.

In fact, Charles believes that a significant number of people will not be in a position to complete their transactions.

He explained: “The overseas money isn't there and if you bought something off-the-plan two years ago and you put down 10 per cent and you're from China, you probably don't care about that 10 per cent. And it's going to be hard to find you in China.”

“[Another] reason is … banks, traditionally in tough markets, call for valuations before settlement and I'm not sure that some of those apartments will meet the bank's expectation.”

“People will either have to cash up, put more cash up front, or they'll have to pull out,” he added.

Tasmania

Tasmania is considered a vibrant market for property investors, but Charles always advises people to be careful about buying in regional areas such as Tasmania and Hobart. According to him, people must instead wait for Melbourne to boom a little before taking the risk.

He explained: “Give it 12 months and then you buy in Hobart because, invariably, people will get some growth in their asset and then they look for an investment.”

“Hobart's a great city and its building costs are not going to be much different but the price of the block of land is going to be significantly different.

“All of a sudden, investment in Hobart looks great and they start to rise because people have gained equity in other locations and are able to use it,” Charles added.

Tune in to Charles Tarbey’s episode on The Smart Property Investment Show to know more about his thoughts and concerns on specific property markets and how it will impact investors, how he thinks vacancy and auction rates will change next year, as well as his advice on the best places to buy in 2018, the trends we will see, and the best time to buy.