Property Predictions for 2016? WIll Property in Major CIties in Australia Crash?
Property Commentator, Michael Yardney, says no way, and here’s why….
Since 1997, Capital CIties in Australia have had sustained growth
The only time Australian property values dropped significantly (albeit for a short time) was after the Second World War and during the Great Depression.
There are a number of reasons why we won’t see major falls in home prices in our capital cities any time soon – says Michael Yardney … We have:
1. Robust population growth fuelled by immigration and to a lesser extent strong natural population growth. While immigration levels have dropped, we’re still growing at a faster rate than any other country in the developed world.
2. A healthy economy that, while slowing a little, will continue to perform at a level that is the envied by of much of the Western world and will create jobs for anyone who wants one.
3. A sound banking system with reasonable interest rates, tight lending practices and low default rate.
4. Business confidence is rising as we seem to have stable government at both the federal and state levels.
5. Consumer confidence has been rising since Malcolm Turnbull was elected prime minister.
6. A healthy level of household debt. Sure we are borrowing more, but the debt tends to be in the hands of those who can afford it. Many Australians are saving more, taking on less credit card debt and paying off their mortgages faster than they need to which improves the state of their personal finances. This in turn reduces the risk of house prices collapsing if interest rates rise or the economy hits a speed bump.
7. A culture of home ownership – 70% of us own or are paying off our homes. In contrast to some overseas markets Australians have high equity in their properties and a conservative debt position. In fact, half of all homes have no debt against them.
Yardneys Prediction for 2016…..
Property price growth in Sydney will likely slow to around 5% over the year ahead and Melbourne prices should grow a little more than this (+7%).
Prices will fall a little more in Perth and Darwin as the mining boom continues to unwind, while Hobart and Brisbane are likely to see continued moderate property growth, but the Brisbane property market should start to pick up further as it plays catch up rising around 7% over the year.