PROPERTY GUIDE 2012
The news is in for most Illawarra and South Coast suburbs in terms of median house prices - they are up in many cases with even a slight spike in sales turnover, particularly in the low to middle of the market.
So is this good news and what does it mean to you?
Without quizzing every home seller and buyer, we can only draw assumptions from Australian Property Monitors (APM), but it appears that like the people working within our sector, the confidence from property consumers is growing.
Only this week, the Property Council of Australia released its quarterly ANZ Property Industry Confidence Survey and the results for the Illawarra showed that 34 per cent of respondents believe economic conditions will improve over the next 12 months.
The results showed that the property sector was optimistic about the industry for the next 12 months. Confidence is a big determining factor when investors and their financial lenders are considering the risk of an investment.
The assumption we made from this data was that the projects proceeding such as the GPT Wollongong Central shopping centre expansion and the Stockland investments in the residential and retail markets are boosting confidence, despite the downturn in our traditional manufacturing sector.
The Illawarra's economy is diversifying and whilst the contraction of the steel industry has a real impact here, we haven't disappeared from the face of the earth, and there is growth in other sectors and a keen enjoyment for where we live that will ensure we evolve and survive.
That confidence is generally reflected in the APM home sales data, more so in the greater amount of sales at the lower and middle end of the market up to $500,000, than in the suburbs which attract the higher income investors.
Industry assumptions are that the top end of the market will take the longest to recover from the hit incurred during the GFC.
So what does that mean if you're speculating about whether to stay where you are, move or even plunge into an investment property in this region?
Job security and the personal management of finances are obviously still huge determining factors for which you need to seek individual advice, but generally if you are currently selling and buying within the same market, property remains a sound investment for most Illawarra suburbs.
Consider the pieces of the puzzle that are fact. According to the IRIS September 2012 Real Estate Report:
- Interest rates have lowered with the Reserve Bank decreasing the cash rate twice in the June 2012 quarter to 6.85 per cent - so it's cheaper to borrow money.
- Rental listings are falling - so there's a tightening rental market which means it's easier for you to rent an investment property.
- Rents have risen for houses by 5.1 per cent and remained stable for units - you'll want a stable return if you're an investor.
And the future is bright according to BIS Shrapnel, who this week predicted that house prices in most capital cities will recover during the next three years, increasing in value by 16-22 per cent which bodes well for buyers in the current market.
As for new homes, the Illawarra still has an impeded supply, although it's great to see house and land packages on the market in new land release areas at an entry level just below $300,000.
Obviously you need to do your own homework and seek personal financial and property advice, but all indicators point to this being a good time to consider investing in the property market.
Disclaimer: The above comment is an informed opinion piece based on assumptions derived from other sources.
This should not be taken as personal property advice by either the Property Council or David Laing.