State of the Property Market July 18

Welcome to my six monthly review of the state of the property market with reference to Brisbane’s Bayside.
Consistent with the general trend across Australia, during the first half of 2018 we experienced a quieter level of activity in property sales in the Bayside, and a reduction in the numbers of investors looking for existing properties. The demand for land has maintained its level, despite land selling for around $1,000 per square metre in some areas.
The table below compares sales in the first half of 2018 with that in 2017, and as you can see all suburbs experienced slower sales, some significantly below the previous year.
Suburb
Properties Sold Jan-June 2018
Properties Sold Jan-June 2017
Change (%)
Wakerley
93
102
-9%
Manly West
106
136
-22%
Manly
31
49
-37%
Gumdale (inc. land)
11
46
-76%
Gumdale (Houses)
11
32
-66%
The reasons for this decline in activity are mainly the result of the following influences:
  • General lack of economic growth in Queensland, particularly in the mining industry. We are now seeing this begin to turn around, so this may help the area, which is popular among fly-in fly-out mining industry workers.
  • Bank tightening of lending, associated with constraints imposed by APRA, the Banking Royal Commission, Reserve Bank and other related decisions. Many buyers have reportedly had their pre-approved amounts reduced when it comes time to actually buy the property they have chosen.
  • Some buyers have been waiting for Brisbane prices to fall as they have in Melbourne and Sydney. Sellers, on the other hand, have been assuming that prices will continue to rise like before, and many have been reluctant to recognise that they can’t expect to achieve the prices they might have hoped for.
  • International trade and politics has had an impact, both on the Australian dollar and interest rates, and consumer confidence.
Prices in the area have mostly stayed flat over the past six months. Median prices for the latest available month compared to last July show either small increases or declines (note that the Gumdale figure includes land sales which impacts the median price).
Suburb
Median Price April 2018
Median Price July 2017
Change (%)
Wakerley
$748,750
$745,000
0.5%
Manly West
$610,000
$605,000
0.8%
Manly
$775,000
$787,500
-1.6%
Gumdale
(inc land sales)
$905,000
$797,500
-13%
Despite the flat period recently, the outlook for Brisbane is quite positive, provided it doesn’t follow the negative influences of Sydney and Melbourne. The Herron Todd White Property Clock for July shows Brisbane at 9 o’clock in a rising market, with Melbourne at the peak of 12 and Sydney at 3 o’clock on a falling market. HTW says about Brisbane that “now is a good time to look at purchasing as an owner-occupier or investor as the market is starting to show signs of positive growth.”
In terms of future expectations, the Westpac Index of Consumer Sentiment rose by 3.9% in July, now at its highest reading since November 2013. However, the Housing Index was down by 0.7% in the latest quarterly results. Westpac forecast is for the Housing Index to improve to 1.2% positive by the end of this calendar year.
While the Reserve Bank has consistently indicated the next move in interest rates is likely to be upwards, it’s July meeting made it clear there is not going to be any rise for quite some time yet, given the weaknesses in economic indicators.
So, my take on all of this is that it’s time the banks got their act together and started lending again. If you’re a buyer, my advice is to get pre-approval before starting the house hunting, so you know what you’ve got to spend. And if you’re a seller, don’t price your property on the market at 10% more than you reasonably think you’ll get, because it will just languish on the market and not sell. Now is the time to price close to the market and buy well in the same market.