It’s safe to say 2018 was a tumultuous time in the Australian property market. We witnessed our property superstars, Sydney & Melbourne experience a devastating blow with Sydney dropping a staggering 5.9 per cent and Melbourne dropping 1.5 per cent. Darwin and Perth both experienced a decline of 3.6 per cent.
Some states bucked the trend and lifted. Brisbane had a minor growth of 0.01% with Adelaide and Canberra increasing by 1.1 per cent and 1.4 per cent respectively. Hobart bucked the trend with a 8.4 per cent property increase.
Everyone was nervous. New builds declined, the Big 4 banks imposed tighter lending conditions and the property market flatlined. As a result, sellers held firm, buyers with decent financial backing went awol and new builds declined dramatically.
The whole nation was waiting for unemployment to rise and the property market to tumble. The doomsday reporting had an element of truth that was hard to ignore.
2019 Market Conditions
Enter The Royal Commission and the Federal Election. A petri dish of uncertainty and a nail in the coffin that was positive buyer sentiment.
The main change came post-royal commission when a new ruling stated the banks could no longer pay mortgage brokers a home-loan finders fee. Additionally, lending conditions remained competitive. Interest-only loans, smaller deposits and equity-driven loans were harder if not impossible to obtain.
Quarters 1 & 2 were shaky, to say the least.
Australian Property Forecast
Fast forward to quarter 4 and it seems the reported property apocalypse is all smoke and mirrors. In fact, we’re now seeing increases across the board. Some slight but none the less, the market is rising.
Just today, the Reserve Bank announced a rate cut (the third for the year) to 0.75 per cent. Lower interest rates coupled with looser lending conditions will result in a more positive market.
So far, house prices have increased by 1.7 per cent nationally. Sydney recorded a slight rise of 0.2 per cent with Melbourne increasing by 0.1 per cent.
Overall, the market is still a hesitant one but certainly, it’s heading in the right direction. Predictions are for a strong 2020 with rates set to remain low.
Custom Home Builder Forecast
Of course, this is all relevant but what does it actually mean for custom home builders? In short, your clients will have more access to finance with more relaxed lending conditions meaning you’ll see more of them in the market.
Additionally, the hesitation experienced in 2018 and the first half of 2019 will lessen. With the change in sentiment in the market, you should expect to see larger projects coming your way.
Our advice is to prepare for a busy 2020 with all of your ducks lined up neatly.
- Plan a strong marketing campaign to land more clients.
- Turn your leads into business with a suite of custom home plans ready to wow potential clients
- Stay current and ahead of your competition
How have the current conditions affected your custom home building business?
Further Reading:
- Source: https://www.realestate.com.au/australian-property-market/property-report-january-2019/
- Source: https://www.realestate.com.au/news/how-will-the-royal-commission-affect-the-housing-market/
- Source: https://www.news.com.au/finance/economy/australian-economy/sydney-and-melbourne-house-prices-increase-for-first-time-since-2017/news-story/2edae336adce91341753eb4272d16b9a
- Source: https://www.news.com.au/finance/economy/interest-rates/rba-interest-rates-reserve-bank-cuts-rate-to-075/news-story/