What will 2017 Bring for the Sydney Property Market? Real Estate Expert Megan Bruton Weighs In

Interest RatesThere is lots of debate on whether or not interest rates will go up this year. Regardless of the RBA’s decision on this, once again banks look set on raising rates independently. Most financial adviser I have spoken with have advised to look at locking in your loans, as rates won’t stay at record low levels and the indication is that rates will go up this year. I would recommend you book time with your financial adviser to go through which options are best for you. If you are looking at selling, then you need to keep your loan variable, since the break out fees in a fixed loan can be prohibitive.

Stricter LendingWorries about housing affordability in Sydney with homeowners stretching themselves too far, is causing banks to be more prudent about lending. A higher level of bank scrutiny on individual housing loans will restrict many buyers ability to increase their loan amount. If you had your pre-approval for a loan done more than 3-months ago, check with you lender if the lending criteria has changed. I would get a loan approved as soon as possible, as it look as though these more prudent lending practices will get stricter as the year goes on.

Off-the-plan Investment Properties

While banks are putting more restrictions on investment loans, in Sydney nearly 50% of the property transactions are for investment properties. Booming property prices and lack of housing stock have caused a big increase in new developments. The supply of new units has finally reached buyer demand in most areas of Sydney. If developers start offering incentives such as rental guarantees and/or offering to pay Stamp Duty, that is a sure sign they are having trouble moving stock. In areas with lots of new development, it is best to be cautious and do your homework about re-sale prices and current rental demand.

Foreign Investment

Although lending criteria for foreign housing buyers has tightened, Australia continues to be an attractive investment option for foreign buyers. The political volatility in American politics, the unknowns of Brexit, and the retroactive foreign buyer’s tax introduced in Canada help make Australia look like a more stable investment option. This is one reason Sydney and Melbourne continue to outperform other areas of the country. A recent review of sales in Victoria and New South Wales saw foreign investment accounted for 30.8% and 24.5% of all sales. With the stability of the Australian economy and the continued increase in housing prices, Sydney will continue to be seen as a safe investment haven for foreign investors.

Rewarded by Renovating

Units:This year I expect to see a big demand for older style unit blocks in established areas. Units with character that are ripe for renovation are proving to be very popular and increasing in price quickly. Popular suburbs close to shops and transport are always in demand. Renovating is a good way to increase your chances of adding value and capital growth in the property.

Houses:

I have found that people either love the fully renovated house or the bomb that needs a complete makeover – there does not seem to be a big in-between when it comes to buyers. People love the fantasy of putting their own mark on a property and many search for property that needs a full renovation. In many cases an un-renovated home will exceed the price of a more livable home on the same street! In 2017 I still see people paying big money for the worst house on the street. I recommend looking for the house that sits somewhere in-between, as these often get overlooked and can offer better value. Find the house that has good bones, but is poorly presented in need of updated paint and floor coverings. These can prove to be little hidden gems.

Commuting Times In 2017 peoples commuting times are a primary concern

for many buyers. A recent study showed that Sydney commute times are worse than many of America’s biggest cities, with close to a third of Sydneysiders traveling more than 90 minutes to and from work each day. WestConnect will make suburbs like Concord more desirable as commute times to the City are projected to be just 18 minutes, down from the current 39 minutes. The North West rail link will make areas like the Hills and Hawkesbury more convenient.

More businesses are moving their offices outside of the CBD to areas like North Ryde/Macquarie Park and Parramatta. These areas are now booming because they offer close proximity to people’s employment. When considering areas that will offer larger levels of capital growth; investment in infrastructure, business districts and transport links should all be considered.

Market ConditionsOverall I don’t see a big change to market conditions in 2017. I believe new unit sales will slow, but demand for free standing homes in inner-ring suburbs will continue to be highly sought after, as stock levels continue to be critically low. The number of new properties being listed is already down by almost 17% by comparison to this time last year, but buyer demand continues to be strong. For this reason, I believe Sydney will witness another strong year of growth and will outperform other areas of Australia.

Megan BrutonMegan Bruton has been a successful Sydney real estate agent for over a decade. She currently works in the Hunters Hill office of BresicWhitney, Australia’s leading property lifestyle group. Megan is a keen property investor and renovator. When she isn’t buying, selling or renovating property, she spends time with her busy family enjoying sights and sounds of Sydney.

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