The cash rate, Chinese investment and rentals – these influences had a big impact on the direction of Sydney’s property, according to The Agency CEO Matt Lahood.
Mr Lahood said that, referring to data by investment bank UBS, Australia’s housing boom has passed, which is backed up by claims from CoreLogic that Sydney has underperformed over October.
“To put this in perspective, this is not a housing bubble bursting nor does it indicate a downturn. This is an important normalising of the market that will help first home buyers and general housing affordability,” Mr Lahood said.
“As I have maintained, a decrease in the rate of price growth will avoid a property crash and create a sustainable and healthy property market. For buyers and sellers, this stable real estate environment means you do not need to panic about time out of the market.
“By this I mean if you sell, there is less pressure to have your new home locked in as your re-entry point is less time dependent.”
For Mr Lahood’s 30-year career, interest rates have been the biggest influencer of property prices, with the higher the rate, the slower the growth.
By holding the rate for 15 months to date, Mr Lahood believes this is to stop an economic slowdown, and by doing so, the RBA is balancing the need to slow down property prices without negatively impacting the economy.
“Fortunately, government taxation measures and stricter investor lending criteria (both foreign and local) seem to have helped slow the price growth. This has also led to an increase in first home buyer activity and lending,” Mr Lahood said.
Director of projects Steven Chen said there has been a slowdown in Chinese property investment.
He said the two principal reasons for this is a cap on exchange and a relaxing of the property law in China.
“The Chinese government is now enforcing a cap on the amount of money that an individual can take out of the country annually, at a maximum US$50,000 in foreign exchange,” he said.
“[Also] Chinese nationals are now allowed to purchase more than one investment property within China – this had previously been limited to one.”
At the same time, he said, Australian banks have tightened lending measures for foreign investors, and the government has increased foreign property investment duties and exit taxes.
National director of property management, Maria Carlino, said the rental market is very active right now. She said October saw a substantial change in average days on the market, with (according to rent.com.au) rental houses falling by 11.4 per cent to 22.1 days and rental apartments by 2.1 per cent to 21.6 days.
“Despite this, yields remained stable, with no change recorded,” she said.
Ms Carlino also said an interesting trend is beginning to emerge – home owners selling their family home to take advantage of their property’s equity and then renting long-term.
“These renters are quality tenants seeking well-presented, quality homes at the same level they’re accustomed to,” she said.
Her advice is to enter the rental market now as the market traditionally quietens down over Christmas.
“Capitalise on the fact most people are keen to have a settled home over this period,” she says.
“But do make sure your lease won’t expire over next year’s holiday period; look to entering into a 13- or 14-month agreement instead of a standard 12-month one.”
In conclusion, Mr Lahood says now is a good time to get into the market.
“If you are toying with the idea of selling and your property displays certain attractive features, such as is located in a coveted or convenient location or has design merits, now is still a good time to get into the market rather than waiting to the New Year,” he said.
“Many areas are still achieving strong results and there is an opportunity to capitalise on the current real estate stability.”
He said the past year has been particularly active.
“Over the last 12 months we have seen a large number of new apartments come onto the market, post an active development period. Despite an increased supply in this segment of the market, if it is an appealing property in a sought-after location, it will make a strong long-term investment and still garner buyer interest.”