Tips for hot markets during the downward cycle

There are also signs that the market could continue downward, according to Shaun Strickland, research adviser for Momentum Wealth.

“Whilst Sydney has already seen a considerable decline in house prices, the market is yet to face the implications of a prospective oversupply of stock after construction levels reached a peak in June 2018,” Mr Strickland said.

“At the same time, transaction levels have already declined 34 per cent in the three years to September 2018, which suggests the demand simply isn’t there to absorb this excess stock.”

With Sydney, as well as other popular market Melbourne, underperforming, Mr Strickland suggested that investors may want to consider other markets.

“A number of property markets across Australia are showing promising prospects as we move through 2019, with Adelaide, in particular, recording the highest confidence levels of all capital city markets for five consecutive quarters to March 2019,” he said.

“Whilst moderate price growth has meant that many investors have overlooked Adelaide’s property market in favour of Melbourne and Sydney in recent years, figures showed that transactions in Adelaide were up 27 per cent since early 2014, with a declining unemployment rate and sustained population growth suggesting further price growth could be on the cards.

“At the same time, Brisbane’s property market is widely considered to have entered its recovery phase, and significant improvements in Perth’s rental market, coupled with rising activity in the state’s resources sector, are pointing towards a market recovery in WA.”

Mr Strickland said Perth and WA were worth keeping an eye on, as he cited data from SQM Research that stated average rental prices rose by 4.4 per cent annually in the year to April 2019 across the state, as well as various pockets within Perth experiencing price growth over the last 18 months.

“Whilst early signs of recovery are yet to translate into headline growth figures, a number of areas within Perth’s central sub-region have been experiencing positive price movements since late 2017,” Mr Strickland said.

“Investors will need to remain cautious of outer suburbs that are still facing considerable oversupply, but these initial improvements certainly suggest a more positive road lies ahead for WA’s property market.”