Economists around Australia have forecast a fall in Australian property values in 2019 and with nearly 55% of the wealth of Australians tied up in property, the threat of a property downturn creates a major cause for concern.
Recently, we have seen the Australian banking sector come under increasing scrutiny over potential “sub-par lending practices”. Consequently, some of Australia’s largest banks have tightened their lending criteria, dramatically affecting Australian’s borrowing capacity.
We have seen some buyers’ borrowing capacity cut by up to 40%. Falling from as high as 8 ½ times their household annual income, to as low as 5 times. This dramatic reduction of available credit has forced Australian property values to adjust accordingly.
The Commonwealth Bank of Australia has recently predicted that Sydney & Melbourne property values will decline in 2019 as much as 10.1% & 8.8% respectively from peak prices. (https://www.businessinsider.com.au/sydney-property-market-price-forecast-2018-9)
So what is our Gold Coast property market forecast for 2019?
Most likely, the Gold Coast property market will remain fairly steady in the first quarter of 2019. However, as the year rolls on and we approach an impending federal election, we believe national property values will continue to drop – led by our capital cities.
Our prediction is that Gold Coast house values will start to drop in the latter half of 2019, coming off the back of the recent nation-wide ‘credit squeeze’, negative media attention and the impending federal election. However, we don’t expect Gold Coast house values to be impacted to the same magnitude as our capital cities.
Unit values on the other hand may be impacted more, with an oversupply of units in some pockets of the Gold Coast plus the addition of several unit developments due for completion in 2019-2020. The unit market may also have the reassurance of negative gearing taken away under a Labour led government.
We hope to see interstate migration continue, which should maintain some positive demand for the Gold Coast property market and expect demand for rental properties to remain very high, which is good news for investors.
As we enter a cooler property market, it’s going to be interesting to see what happens in 2019 and how the Gold Coast property market will fair. Clearly it’s impossible to predict future market trends but many of the insights we’ve listed may be the difference between profiting from your property’s sale now – or potentially not moving forward.
What are your thoughts?
Is there something we’ve missed in our predictions? Let us know in the comment section below.