In this episode of Market Watch, Scott and Debra delved into the August 2024 sales performance for the Australian Property Market.
The theme of the past few months continued – with the sell off in Melbourne becoming a really concerning trend, a slow down in Sydney, but Perth, Adelaide and Brisbane continued their upswing.
Famously, Debra has always warned against Adelaide as it just doesn’t have the price drivers – job diversity, young demographic mix, and strong infrastructure pipeline – that Perth and Brisbane have, and she expects Adelaide to hit the wall just like Hobart has.
The chart below shows the dramatic difference in property values across the country.
Where to next?
As Debra and Scott always say, the sales results are history only and not an indicator of where prices are heading. So, in the second part of the episode Scott and Debra discussed the areas they see having great capital growth potential and the factors driving prices and rental demand.
Of course, there will be different characteristics behind your purchase depending on whether you’re looking for an investment or home.
If you’re looking for an investment property both Debra and Scott give the tick of approval to South East Queensland, Perth, and Sydney markets. These aeras will have opportunities for most budget levels. Even Sydney has some good opportunities at the lower budget level particularly if you can purchase budget units that have been rezoned.
For example, the property below in Parramatta which was on the market for just under $500,000 with rental return of $550 per week. Currently it’s ten floors high, but has been rezoned to allow construction to 60 floors. This would be a great purchase if you pooled with other owners in the building and partner with a developer to knock the building down and replace with a multi-high rise. It could mean your one unit can turn into three or more.
Other areas we really like – for a budget option Debra would give Toowoomba a close look while Scott is a fan of Hervey Bay – both of these are Queensland options.
Scott also likes Tamworth and discusses the reasons why in the podcast. They both like Newcastle and Wollongong – though some people would consider these areas just to be ‘Sydney’.
If you’re looking for a home then look for properties with good potential . .at any budget. Of course you will have personal requirements like family, friends, and your work location to help you determine where you would target. Just be mindful of ‘false’ bargains like purchasing on busy roads, or being too close to noisy infrastructure.
If you have some flexibility, then ideally choose locations that have good growth potential but if you’re thinking of purchasing in areas Scott and Debra haven’t recommended, then you’re advised to negotiate very diligently to protect your financial future.
This is particularly true if you’re considering purchasing in Melbourne. Debra is very concerned for first time buyers considering purchasing in pretty much any suburb in Victoria. You will need to be offering $50,000 to $100,000 off the current asking prices if you’re going to manage to avoid negative equity positions (where your loan is higher than the value of your property). The price downturn in Victoria is just starting and is expected to continue for at least two years – either until the Victorian Government changes the tax situation or the current government is voted out.
We have seen this kind of government intervention in the property market before. The Melbourne story is similar to the time the Carr Government introduced a vendor’s tax (property vendor duty) in NSW in 2004. It had an immediate negative impact on prices in the State and was abolished by the Iemma government when it was elected in 2005.
No matter what you buy, you’ll need to be negotiating carefully, but don’t be fooled thinking the Victorian market is a ‘buyers’ market . . it’s not. It’s not even a bear market, more like a crocodile market that will chew up your financial future.
About the author
Debra Beck-Mewing is the Editor of the Property Portfolio Magazine and CEO of The Property Frontline. She has more than 20 years’ experience in buying property Australia-wide and has extensive experience in helping buyers use a range of strategies including renovating, granny flats, sub-division and development. Debra is a skilled property strategist, and a master in identifying tailored opportunities, homes and sourcing properties that have multiple uses. She is a Qualified Property Investment Advisor, licensed real estate agent and also holds a Bachelor of Commerce and Master of Business. As a passionate advocate for increasing transparency in the property and wealth industries, Debra is a popular speaker on these topics. She is also an author, podcast host, and participates on numerous committees including the Property Owners’ Association.
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Disclaimer – This information is of a general nature only and does not constitute professional advice. We strongly recommend you seek your own professional advice in relation to your particular circumstances.
