Welcome to the first of 2019’s ponderings….
We hope you had a peaceful, loving and joyous holiday break and this finds you well.
Now that 2019 has arrived, I guess you might be wondering what is likely to happen with real estate over the coming months. Two industry leaders for whom I have immense respect made some predictions at end of last year and I’ll share those with you – you may see a pattern as I show the subject matter of each prediction…
I will repeat the content to each prediction from A1 and A2 (Agent 1 & 2) both are Brisbane based and are separate from each other in terms of organisations.
A1: Median prices will drop in the order of 2-3%
A2: Low level increase in the order of single digits -not clear if that’s 1 or 9 -presuming 1
On the Election:
A1: Very slow market in March/April as we come closer to the election
A2: Market will go into a holding pattern when the election is called
On the Banks:
A1: They will start to loosen their lending procedures towards end of 2019 as shareholders become more agitated and profits start dropping
A2: They will remain conservative with lending policies beyond the handing down of final report of Royal Commission due on 1st February
On Interest Rates:
A1: Official rates will remain virtually unchanged although the banks will raise their own rates in an attempt to counter balance decreasing profits
A2: Official rates likely to come down further which may ease the influx of mortgage stressed properties thus easing any extraordinary spike in supply of property to the market
A1: Reduction in number of real estate agents across the board and a trend of agencies starting to abandon the franchise model to operate as independent agencies again
A2: Use of Buyer’s agents will continue to increase in popularity
A1: Unit and townhouse market will continue to struggle with maybe an improvement towards the end of 2019
: Investigation into the operation of “Body Corporates” and a major crackdown on their policies and procedures
A2: Proposed changes in tax laws will impact prices over the longer term as it will impact the after-tax returns on those properties affected. These changes will take some time to arrive
: Auctions will become more prevalent but the clearance rate on the day will decrease
A1: Parramatta Eels will break their 33-year drought
A2: Newcastle Knights will make it to the top 8
You might say “So what!” on the footy, but the rest of the predictions are interesting to say the least and to me the most interesting pattern is that both A1 and A2 are quite distinct from each other in their predictions other than on the election.
Here is my take on all of this:
P – Price. If a property doesn’t represent value to a buyer, they will not buy, and it will sit, and the price will eventually reduce accordingly. Presently buyers are listening to all the negativity surrounding the market and thinking they can “steal” things with the result they are missing out on their dream. Some sellers are also listening to the negativity and either panicking and dropping their pants or not coming onto the market at all.
At the end of the day, if your transaction provides you with the change you desire (both life change and the change in your pocket) then it doesn’t really matter what the prices are doing – what matters do you really want to sell, and do you really want to buy.
As mentioned in previous ponderings, I still think prices will hold on the Sunshine Coast overall for the immediate future. However, the past 1.5 to 2 years of fabulous growth in some sectors is not likely to continue and anyone basing prices on that growth, are likely to be on the market for a good while.
Agents have enough “monitors” at our disposal to be discussing with you how your place is situated. It really depends whether you want to be sitting on the market for extended periods or not. Some will not broach the subject at and the results can be dire.
Brisbane is a different story and I agree with A1 – prices will drop in Brisbane.
P – Election. I agree with A1 & A2 on the election. Elections negatively impact just about every industry apart from media and print.
P – Banks. They should be more responsible in their lending policies and buyers looking to buy more than they can afford will nearly always end up in trouble.
P – Interest Rates. I like to think they will stay stable but agree with the banks answering to their shareholders as they tend to do. To me the problem is any increase in rates will negatively impact the market (especially the stressed owners) and because we are so in love with property that will have reaching effect into many associated industries which in turn will most likely impact the banks bottom line anyway. Consequently, we don’t learn and likely go around the mulberry bush yet again.
P – Agents. I think there will be a reduction of agents this year since when times are good, many join in and when it gets tougher, many leave. Not so sure about buyers’ agents though
P – Other Matters I have no prediction on body corporates other than it is about time; Unit and townhouse market is struggling and likely to for a while; The tax laws if implemented will impact prices for sure but people will continue to invest in property and make money even though some of it may go to the government; Auctions will be location and motivation specific as to outcome and the “on the day clearance” will continue to drop as the urgency in the market place abates.
P – Footy. I hope Parramatta breaks their drought – I followed them religiously when living in Sydney. Their drought started a few years after I left??? I don’t really like the Knights.
Obviously, we all have different takes on everything, and the reality is none of us can know what the outcomes will be until they are all said and done, and the only thing things guaranteed are death and taxes.
And as I mentioned last pondering:
The answer for 2019 I think, is to remain flexible and responsive to changes that not only appear to be coming our way but are coming sooner than most of us thought.
Our team is tight, supportive, realistic and operates out of integrity – only good things can come of that. We are poised for a great 2019 and ready to be of service at all times.
As one of the two agents mentioned in the predictions, it doesn’t matter what is going on at any one time and his best advice is:
“Buy when everyone is Selling and Sell when everyone is Buying”
Many say: “Buy and Sell in the same market things will be fine.”
Petro says: “Who is on your side matters greatly”
Until next week Happy Listing Selling and watching out for Who Matters.
PS Here is what Core Logic’s latest report on the market says:
Brisbane and Adelaide remained the most stable capital city markets over the year, recording median price growth of 0.2 per cent and 1.3 per cent, respectively. However, another report states: “Buyers have had a breakthrough in Brisbane with home values dropping simultaneously over the month and the quarter for the first time in over a year.”
Here is the full article