PROPERTY MARKET UPDATE

VALUES ACROSS FIVE OF EIGHT CAPITAL CITIES REACH RECORDHIGH IN FEBRUARY

B Y T I M L A W L E S S , CORELOGIC HEAD OF RESEARCH

The Corelogic February 2020 Home Value Index results released today confirmed that nationally, housing values surged by 1.1%, with values across five of Australia’s eight capital cities reaching a record-high.

A rebound in the pace of capital gains across the Australian housing market throughout February saw the national index rise by 1.1% over the month, with the strongest capital gains continuing to emanate from Sydney (+1.7%) and Melbourne (+1.2%), while the remaining capital cities recorded a more modest rise, with Darwin the exception where home values were down 1.4% over the month.

On an annual basis, both Sydney and Melbourne moved back into double-digit annual growth rates, with values up 10.9% and 10.7% respectively over the twelve months ending February.

The latest results continue the recovery trend that has been running since June last year, following a peak-to-trough decline of 8.4% in the national index, with larger falls in Sydney (-14.9%) and Melbourne (-11.1%).

While there is large variability in capital growth from region to region and across the product types, every capital city excluding Darwin is showing an upwards trajectory, demonstrating a geographic broadening in the recovery as low mortgage rates and better access to housing credit fuel buyer demand.

Since finding a trough last year, the national index finished February only 1.2% below its 2017 peak. According to CoreLogic head of research Tim Lawless, “At the current run rate of growth, the national index is likely to reach a new nominal high over the next two months.”

Melbourne was the most recent city to stage a nominal recovery with housing values surpassing the September 2017 peak last month. Melbourne has joined with Brisbane, Canberra, Hobart and Adelaide where housing values are also tracking at record highs.

Despite posting the most rapid recovery trend amongst the capitals, Sydney housing values remain 3.7% below the 2017 peak; based on the rate of growth over the past three months, Sydney housing values could stage a nominal recovery by the end of May this year.

Further evidence that the longrunning downturn is over for the Perth housing market was revealed, with dwelling values increasing by 0.3% in February, marking four consecutive months where dwelling values have avoided a fall; a trend not seen since the market peaked in mid-2014. Tim Lawless said, “Although Perth values are now trending higher, the recovery period is likely to be a long one, with Perth housing values remaining 21.0% below their peak.”

Regional markets are generally lagging behind the capital cities, with housing values only 1.4% higher over the past twelve months compared with a 7.3% rise across the combined capital city markets.

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IS THIS THE PERFECT STORM?

B Y CHRIS GRAY, CEO, YOUR EMPIRE

Chris Gray began his property investing journey when he was 22 years old. With only $35,000, he spent the next nine years learning about investing fi rsthand, and applying that knowledge to his own portfolio now worth over $15m.

“Is now the right time to be buying property?” That’s got to be the number one question I hear around property conversations, second only to “Where should I be buying right now?”

Everyone’s got an opinion, especially those hanging around the family BBQ that have probably only bought one property in their lives and still work a 9-5 job.

If there was ever a perfect time to be buying property, it would be when you have all these fi ve elements: 1. High Capital Growth

2. High Rental Yield

3. Low interest rates

4. Easy to borrow money from banks

5. Easy to fi nd properties

I’ve been investing in property for almost 30 years and unfortunately, I’ve never seen such a time and I very much doubt that I’ll see it in the next 30 years.

There’s always a reason NOT to buy:

• Since the day after the election in 2019 the market has got stronger and stronger. It’s increasingly harder to buy and so people think they’ve missed the boat

• As we came towards the election, that would have been a good time to buy as the change in negative gearing was going to be grandfathered and so buying then would lock you in for the tax benefi ts. However, virtually no one bought as they

were worried about a potential crash afterwards

• In 2018 and 2019 we had APRA and the Royal Banking Commission which made it harder to borrow. That would have been a great time to buy if you could get a mortgage as there was no other buyers in the market. Most people that could borrow, were trying to ‘bottom’ the market - nearly everyone missed it

• Leading up to 2017 was the last boom. The worry was trying to pick where the top of the market was. Looking back in hindsight, most properties didn’t drop that much and if you still owned it now, you would probably have made a profi t.

At the moment it's the C Word (I don’t want to mention the word as otherwise it will further feed the hype). No one knows what’s going to happen or how it will affect the property market, but then no one

did with the GFC, bird flu, swine flu, SARS etc etc.

Sitting on the fence is the easiest thing for everyone to do as it keeps you in your comfort zone and you are surrounded by other people doing the same. Taking some action will set you up for potential criticism or ‘free (unwanted) advice’ from your friends, colleagues and naysayers.

As buyers agents we’ve found it harder and harder to buy homes and investments pre-auction as there’s more and more competition and still not much stock on the market. I believe it’s going to get even harder in the next 6, 12, 18 months. So, if the C word does create some temporary uncertainty and a break in the next upswing, I think that could be your perfect storm.

My personal strategy is to buy:

1. When I’ve got the cash to buy, and;

2. When I’ve got the cash to hold on for the short to medium term

It’s a very simple strategy but it seems to have worked over 30 years of booms, busts and global scares. It’s certainly not guaranteed for life, but if you never give it a go, you’ll never have a chance of success.

“I've been investing in property for almost 30 years and unfortunately, I've never seen such a time and I very much doubt that I'll see it in the next 30 years.”

ABOUT THE CONTRIBUTOR

Chris Gray is CEO of Your Empire, a buyers’ agency that buys homes and investments for time-poor people – searching, negotiating, renovating and managing property on their behalf. Chris has spent over 10 years as the host of ‘Your Property Empire’ on Sky News Business channel, where he’s interviewed various heads of property research companies and major industry figures. Chris is a qualified accountant, buyer’s agent and mortgage broker. For more information visit www.yourempire.com.au, www.chrisgray.com.au and follow Chris on Twitter: @ChrisGrayEmpire.