By John McGrath
Following exceptionally strong growth in Sydney house prices over the past two years (RP Data reports 13.4% in 2014 and 15.2% in 2013), buyers might be asking themselves if they’ve missed their opportunity to buy.
It’s understandable psychology, especially if you’ve been in the market for a long time and missed out on several properties. But the short answer here is no, you haven’t missed the boat. There are always opportunities – even in hot markets; and as property should always be a long-term play, a premium price paid today – within reason, won’t matter much in 10 years’ time when your home’s value has doubled or gone close to it.
Sure, it’s not ideal to buy in a boom. We’d all like to purchase in the dead of a market and ride the wave of capital growth when the cycle turns. But few people get this sort of timing right. For the ordinary Sydney buyer, the old adage that time in the market is more important than timing the market holds pretty true.
Here’s something else that buyers commonly wonder after a prolonged period of growth.
Should I wait for prices to fall? This is a classic trap and it’s an easy one to get caught up in when we’re hearing scare stories every day about the mythical ‘property bubble’.
Consider this. Our company finished 2014 with $2.29 billion in sales over the last two months of 2014 alone. This included a 25-year record in November with $1.27 billion. This sort of strong sales activity isn’t going to come to a screaming halt just one month later. Property markets move pretty slowly compared to other assets, like stocks.
Here’s what I think is going to happen this year.
After two very strong years of growth in Sydney, the rate of growth is going to slow. Let me emphasise I’m talking about the rate of growth. Price growth will continue in 2015 but it won’t be at the heady levels of 2013 and 2014. I think house prices will rise about 5-8% – that’s half the rate of 2014 but still pretty good, wouldn’t you say?
Over the next three years, I think we’ll see Sydney prices move forward by 20% overall – so we’re talking 5-8% average growth per year in 2015, 2016 and 2017. With that in mind, buying now doesn’t seem too risky a decision. Spend $500,000 today and if my predictions are right, in three years that property will have made you $100,000.
Our first auctions in Sydney will start next month, with February 21 and February 28 already shaping up to be exceptionally busy days.
Further afield, I think South-East Queensland will be the best performer on a national level for the next year or two. I’m predicting price growth of around 10-12% in 2015.
South-East Queensland has only just shifted off the bottom. Brisbane will lead in terms of price growth, followed by the Gold Coast. I’m also expecting price growth on the Sunshine Coast and in inland Toowoomba, where local factors like the new hospital on the coast and the new airport in Toowoomba should impact property prices in a very positive way.
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