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A slowdown in demand from investors, thanks to higher interest
rates, has provided less competition for prospective buyers
and price growth has slowed with it. This evolution of property
market dynamics is expected to continue throughout 2016 and
bring with it a host of new trends and opportunities.
Three trends to watch out for in 2016
1. The return of first home buyers
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Traditional (as opposed to first time investors) first home
buyers (FHBs) will come back into the market.
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There will be less from investors who generally compete for
the same stock as FHBs.
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More choice for FHBs thanks to increased listings and
delivery of newly built apartment projects.
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Lower levels of price growth should increase affordability.
2. Lifestyle markets outperform
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The fall in the Australian dollar will see tourism and lifestyle
focused local economies begin to rise.
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More money flowing into local economies means more
money for locals to purchase property.
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Expats living overseas will also take advantage of the lower
dollar to buy a “holiday” home here.
3. Renovators’ delight
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Buyers now look at how they can “add value” to a home
before they purchase.
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How a home is presented for sales is now very sophisticated.
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Adding value through granny flats, decks and other
complying developments.
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Buyers no longer buy a “long term” family home, but one
which they can renovate to add value and bank capital gain
within 5 to 7 years.
What is in store for 2016?
Overall, the outlook for the Australian property markets remains
upbeat. Buyer demand will continue to remain in place across
most capital cities, underpinned by record low interest rates.
Although there was a drop-off in investor demand towards the
end of 2015 this may again return if the volatility in the share
market remains. That said, first home buyers will be the biggest
beneficiary from lower investor demand, as the two generally
seek the same housing types. On the supply side, listings
have now begun to rise, helping to relieve some of the pent-
up demand and providing more choice for buyers. Therefore,
while the conditions which drove strong growth in 2015 have
changed, the underlying market fundamentals remain solid,
ensuring that 2016 will be positive for most capital city markets.
A year of many opportunities
The story of 2015 for Australia’s property markets was a tale of two tiers.
Sydney and Melbourne outperformed other capital cities. However, the
past six months has seen market dynamics change.
Lifestyle hotspots
Byron Bay, Batemans Bay,
Forster/Tuncurry, Palm Beach
Surf Coast - Lorne, Torquay
Hobart
Victor Harbor, Barossa
Mandurah, Margaret River
Cairns, Gold Coast, Noosa
NSW
VIC
TAS
SA
WA
QLD
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