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2015 Property Predictions

Posted by PRD Nationwide on 2 March 2015
It is without doubt that the Australian housing market has achieved significant, at times unprecedented, price growth in 2014.  As an overall, regional areas have also experienced a boost in price growth - albeit at a slower rate in comparison to capital cities.

A question posed by property players (buyers, investors, and commentators alike) is whether or not such growth is sustainable (in particular Sydney); and if perhaps we are heading towards a property crash in the near future.

We surveyed available analysis (be it in qualitative or quantitative methods) and opinions dated 1 January to 13 February 2015 from property players, industry heavy weights, and sales agents nationwide; and asked the same question: What do you expect for property in 2015?

Interestingly, positive forecasts outnumber the plateau forecasts only marginally 57% to 43%. This suggests that property analysts and commentators have mixed opinions on 2015 property market trends, however positive forecast is still the majority.

2015 holds promises for the property market with favourable conditions such as low interest rates, low Australian Dollar, low oil and petrol prices, and high foreign investor interest from China and India. Already dwelling values are predicted to increase by 8.5% across the combined capitals (API Magazine 2015), auction clearance rates in Sydney and Melbourne are off to a dizzying height (Domain News 2015), and vacancy rates have fallen by an average of 0.3% between December 2014 and January 2015 (Property Update 2015). 

However there are other factors that will play a role in offsetting and/or dampening this trend, such as: high unemployment levels, unstable political conditions (which suggests fiscal policy such as taxes and benefits can change dramatically), and low consumer and business confidence.

There is also fear that low interest rates will fuel local investment, which, combined with foreign investment, will add pressure to property prices - thus further pricing out owner occupiers and first home buyers. The gap between investment and owner occupier in December 2014, prior to February 2015 rate cut, is already at an all-time high.

In conclusion there is mixed opinions on what lies ahead for the property market in 2015. 2014 saw Sydney and Melbourne lead the way in property price growth; with Brisbane, Adelaide, and Tasmania being named as areas of growth whilst also crowned as being 'more affordable'. It is possible, that due to perceived affordability these three 'little brother' capital cities will draw higher level of investors and become winners in 2015. Outer ring and satellite cities are also identified as hotspot areas to watch out for in 2015, as many owner-occupiers and first home buyers inch out from capital cities in search for affordability.

Author:PRD Nationwide

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