With 2012 well under way it will be interesting to see what happens to the Property Markets across Australia this year.
Most of the indicators would suggest that in 2011 the property markets had bottomed and we should see steady growth throughout most of Australia for the remainder of the year.
So as an investor what does that mean for you?
Firstly if you are buying into the bottom of the market there is a lot of potential upside. In other words if you buy well there will be a great opportunity for you to increase your equity as the market improves.
Secondly as the market has remained tight for the last 12 months with limited construction taking place across Australia, we have again seen a shortage of rental properties. So that means that properties are achieving record rents in many of our capital cities across Australia.
Where are the opportunities?
It is true that there are opportunities throughout Australia. However one of my picks for 2012 is Brisbane. The reason for this is because of the floods that occurred around 12 months ago, along with a lack of confidence in the Queensland government, have led to a serious lack of confidence in the local economy and that has fed into the Property Market. Because of this, it is my view that the Brisbane market is undervalued compared to most other cities in Australia. For instance you will pay a lot less for property compared to Melbourne or Sydney and yet rents are about the same with an inner city 1 bedroom apartment commanding more than $400 per week.
I think that with a change of government in NSW, the property market appears to be improving. However it is still an expensive market. In Melbourne the property market has been steady for most of 2011 and there are signs that there will be improvement in 2012. Most other property markets we currently have under review.
I think we will need to watch Europe carefully in the first quarter. I think that it is highly likely that a number of countries will default on their debt. Although I think it is unlikely to have a major effect on the Australian economy, there is a strong chance that it could lead to a liquidity problem in our finance markets making construction finance tight in 2012.Nigel Kibel | Property Know How
http://propertyknowhow.com.au
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Nigel Kibel wrote:With 2012 well under way it will be interesting to see what happens to the Property Markets across Australia this year.
Most of the indicators would suggest that in 2011 the property markets had bottomed and we should see steady growth throughout most of Australia for the remainder of the year.Hmmmm………
That stuff you get from Crusty the Clown is highly unreliable.
I prefer these guys http://www.macrobusiness.com.au/2012/01/mortgage-data-indicates-ongoing-melt/
The Freckle
I agree Freckle.
People have relied on Capital Growth to sustain their property portfolios and in a stagnant market people are going to have to sell because they used their capital to cover the mortgage payment short fall. This has caused an increase in properties being sold with very few buyers in the market due to financing difficulties. I know in the area I live, property prices have returned to 2007 prices. People who bought after this period have lost 10's thousands of dollars in capital.
I believe the market will be flat for a long time, but there are great deals out there if you can finance them! Buy and hold strategy is always the best if possible.
Kaylah wrote:I agree Freckle.People have relied on Capital Growth to sustain their property portfolios and in a stagnant market people are going to have to sell because they used their capital to cover the mortgage payment short fall. This has caused an increase in properties being sold with very few buyers in the market due to financing difficulties. I know in the area I live, property prices have returned to 2007 prices. People who bought after this period have lost 10's thousands of dollars in capital.
I believe the market will be flat for a long time, but there are great deals out there if you can finance them! Buy and hold strategy is always the best if possible.
Where are you talking about?
Certainly not Sydney. We're moving nicely thanks.Catalyst wrote:Certainly not Sydney. We're moving nicely thanks.Sydney has it’s problems too Cat. The advantage Sydney offers though is that it is a National as well as State capital. Areas of Washington DC were one of the few areas of the US to continue to rise in a crashing market.
The risk for Sydney is the coming white collar recession. Much of Sydney’s workforce is located around the financial services and general services industries which are the one’s that will take a hit over the next year.
Another threat to Sydney is $2B that Chinese investors poor into the PI market there. Hard to say how that one will pan out over the next few years. On the one hand the Chinese may see Australia as a safer haven than China and stay or they may need to cover losses in China and subsequently withdraw. A deterioration in the Chinese economy may also reduce the volume of investment coming out of China and that could substantially affect the demand curve.
Interesting times ahead. Glad I’m a spectator and not a player.
The Freckle
Freckle, I recently read that the Chinese have already poured millions of investing dollars into Australia, prefering to invest here than China. I agree with you and I think that it is set to continue over the next year
I didn't say Sydney had no problems. I just think it's ridiculous to make broad stratements about the "Australian Market". There's no such thing in it's entirety.
As for me I'm a very willing player. Spectators can't win. Bring it on.
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