What a year it has been for the property market in Australia. After years of boom times, many areas have experienced a downturn.
Now we are almost half way through the year, it’s a good time to take stock and look at what’s in store for the wider market and for Mosman in particular over the coming months.
The Australian property market: early 2019
Around Australia, average property prices took a hit in 2019. In Sydney, the median house price for all suburbs dropped over 15 percent between May 2018 and May 2019. This has represented one of the steepest ‘corrections’ in several decades.
Suburbs hardest hit include Gladesville and Epping, which lost 18 per cent from the average price. In terms of apartments, Double Bay and Little Bay near La Perouse lost 16 percent of their value over the last year.
It is worth noting these drops came off significant gains between 2012 and 2018. The average house price for Sydney is still over $1 million. When you consider it was $550,000 in 2012, homeowners have still come a very long way.
There were a number of reasons behind the drop in prices. Firstly, such a dramatic rise over a relatively short time was bound to correct itself eventually.
Then, the banking royal commission led to tighter lending conditions. This ruled several potential buyers out of the market, in particular first home buyers.
When the property market slows, buyers become cautious. They do not wish to overspend as they feel concerned about buying a home that will drop further in value. Instead of competing to pay more, they keep their bids low or decide to wait a while. This results in a glut of properties for sale and lots passed in at auction. The problem starts to compound on itself, although savvy investors realise the opportunity to grab a bargain.
Now the election is finished, and with talk of a drop in interest rates on its way, many economists are declaring property has reached its bottom point.
Chief Economist at HSBC Paul Bloxham recently stated that evidence shows the housing market should stabilise during the second half of this year. According to Mr Bloxham, auction clearance rates are beginning to pick up, as are loan approvals, which puts buyers back into the market.
“The pace of decline in housing prices has slowed recently and consumer sentiment surveys suggest that a rising share of households now see it as a ‘good time to buy a home’,” Mr Bloxham shared.
Core Logic, the data source the property industry relies on, is also providing evidence the slide is coming to an end. Executive Research Director Tim Lawless says “the worst of the housing market conditions are now behind us.”
The outlook for Mosman property
While home sellers have struggled around the country, Mosman and Neutral Bay are suburbs that have bucked the trend. Despite the national downturn, prices in our area actually increased by six per cent from May 2018 to May 2019.
Why the uptake? Partially because the area is small. People hold on tightly to property and there are few new developments. It is known globally as a lovely place to live, so there is always competition from buyers near and far.
There has also been a degree of seller caution in Mosman this year. Some property owners saw the nationwide downturn as a reason to postpone their sale. This led to reduced stock on the market. With plenty of interest coming from local and overseas buyers, the limited property numbers pushed the prices up.
Right now, even though Mosman hasn’t been affected by the property downturn, buyers are realising an even larger jump may be on the way. They are keen to get their foot in the door (quite literally), so if you are thinking of selling, there is no reason to hesitate.