The residential housing sector has kicked off 2014 with a bang. Real estate analysts are seeing a boost in market confidence as high auction rates for both Sydney and Melbourne held steady during the early months of 2014. Most property experts believe this trend will continue well into 2014 before easing off towards the end of the year and into 2015.
Sydney in particular is seeing an impressive 80% auction clearance rate, which points to a further rise in prices during the year. While Melbourne had a slightly flat spot during February, according to the Australian Property Monitors’ Andrew Wilson, overall clearance rates for the beginning of the year were considered to be “solid”[i]. The average price for houses sold at auction in Sydney was just over one million dollars, with the average median price for apartments coming in at $681,005.
Melbourne’s market may be seeing a “catch-up” effect from the relatively subdued levels of auction rates last year. According to the Managing Director of Victorian Property Auction Services, Bernard Lawry, the market was beginning to respond to the ongoing record low interest rates and particularly among those interested in property investment in Melbourne[ii]. This can be seen by the increase of investors coming into the market who are looking for new developments in some of the traditionally high end suburbs including Toorak, South Yarra, Brighton and Balwyn. The influx of overseas buyers, especially from China, is also helping to boost auction rates in both cities.
Bill Evans, Chief Economist at Westpac, also believes that investors are driving the current boom in property, with investment lending figures up by around 35% across Australia, and by almost 55% in Sydney[iii]. Owner occupiers are also increasingly looking to upgrade, and he also believes that overseas investors are “dominating” the market, with investor sentiment unlikely to cool any time soon. This is in contrast to first home buyers who seem to be either priced well out of the market or holding back to wait for a drop in prices.
Along with increased competition among banks, the Reserve Bank’s decision to keep official interest rates on hold at the beginning of March is likely to also provide further stimulus to the market.
While the outlook for the property market remains strong, those considering investing property investment in Sydney or Melbourne are advised to seek expert professional research and advice before taking the plunge. Investors, whether they are first time investors or have an existing property portfolio, need to consider a number of factors including:
- Types of suitable property – new, existing or off the plan
- Getting the right property in the right area
- Issues surrounding contracts, settlement lengths, holding costs and
- Finding tenants, being a landlord and property management
- Long term strategic investment goals
As an investor, finding the right property specialists is critical to getting timely and practical information as well as ongoing support. Look for professionals such as Ironfish who have demonstrated experience finding, analysing and selecting quality investment properties.