IT’S THAT time of year again, where we look back to analyse what’s happened in the property market over the past 12 months and gaze into the crystal ball to predict what’s ahead in 2019.

There has been a lot of doom and gloom around property recently, with headlines focused on price falls, lending restrictions and the fallout from the banking royal commission.

While those headlines would have you believe Australia’s property market, on the whole, is on the decline, they don’t take in the full picture. If you examine the data more closely, you’ll find Sydney and Melbourne have driven the national fall in dwelling prices with drops of 8.1% and 5.8% respectively as at the end of November according to CoreLogic. But that’s after Sydney experiencing massive growth in the five years to 2017, with the median house price growing by more than 80% over that time, according to the QBE Australian Housing Outlook 2018-2021. CoreLogic data shows prices in Perth have also fallen by 4.2% to date this year, while Darwin has seen a slight fall of 0.8%.

There are positive results around too, with some areas growing. On the flipside Hobart dwelling values have risen by 9.3% over the year to November, followed by Canberra (4%), Adelaide (1.4%) and Brisbane (0.3%). Over the last month dwelling values have moved higher in five of the eight capital cities – with the exception of Sydney, Melbourne and Perth – which is a positive trend.

But now we have said goodbye to 2018, what can we expect from 2019?

Big events could define the market’s performance.

The likelihood is that the property market will maintain the status quo until around the middle of the year after the Federal Election takes places in what will likely be May. Having a result from the election can lead to greater political stability and in turn, greater confidence for buyers and sellers to act.

Of course, the housing policies of the elected party are the X factor as they can impact the property market significantly, particularly concerning demand and supply. Bill Shorten and the ALP look likely to be elected and the party’s long-promised policies to change negative gearing and capital gains tax could affect demand, in particular, both prior to and after the election.

Buyers – particularly investors – may decide to act in the months preceding the election, before any changes to these policies are made, so they can take advantage of existing arrangements, and this could provide a short-term boost to the market, and prices. However, investors may be less inclined to buy after the election, if and when these policies are implemented.

Shorten has also recently announced another policy to commission the construction of 250,000 new affordable homes if elected, with subsidies of $8500 a year offered to investors building new homes, with the proviso that rents would be 20% under market. The party’s policies could lead investors to lean towards new homes, which usually aren’t the best investment option, and could also increase supply, particularly in outer areas, affecting prices in those regions.

In between now and the Federal Election, there will be two other significant events that could impact upon Australia’s property market in 2019 – the New South Wales State Election in March and the conclusion of the banking royal commission, with findings to be handed down on February 1.

After these major events are over, we’ll have more of an idea how the property market will end up over 2019, with the second half of the year being the one to watch, and it could be the one where prices rebound.

Bear in mind however that many other variables affect how property markets perform outside of politics, legislation and regulation, including interest rates, lending policies, immigration and hence population growth, economic growth and employment, let alone global affairs like Brexit and of course, the Trump factor. These will all need to be watched and could impact the market next year.

Already APRA has announced its temporary interest-only cap of 30% for new lending will be removed from January 1 2019, which could mark the start of a loosening of credit, particularly for investors, which could increase buyer demand, mainly if rates for investor loans also fall.

Where to invest in 2019

It remains to be seen whether prices will keep falling in Sydney and Melbourne or stabilise next year – there are predictions either way, but no one can know for sure.

Just like in any city, some areas in these capitals will always experience growth, so buyers looking in these areas must buy wisely and choose the right properties. Indeed it could be a good time to buy in Sydney and Melbourne, with prices down and less competition with fewer active buyers.

However, we believe there are better opportunities elsewhere, particularly in South East Queensland (SEQ), and especially Brisbane and the Sunshine Coast, which have been our focus for our clients over 2018 and will continue to be in 2019.

The market in these areas isn’t booming, but there’s steady growth, which makes it a safer investment, and we have been securing good yields for our clients in the properties we have been purchasing for them.

Further growth is on the horizon in SEQ too, with critical drivers including affordability, population growth and infrastructure spending.

Other fundamentals, such as economic growth, will need further improvement before prices significantly strengthen across the board, but this could be just around the corner. According to the QBE Australian Housing Outlook 2018-2021, Queensland’s economy is showing positive signs with mining beginning to improve and other industries, including tourism and education, strengthening due to the lower Australian dollar.

Many forecasts predict Brisbane will have one of the strongest property price growth rates of all the capitals in the coming years. According to the QBE report, Brisbane is forecast to have the second highest median house price growth of 11.3% over 2018 to 2021, second only to Adelaide at 12.4%, with growth expected to pick up around 2020/21. Units, however, are expected to fall in value by 5.1% over the same period.

What should buyers do this year?

If the circumstances are right for you to take on the debt and you can secure funding, then it’s the right time to buy.

Having said that, 2019 could be the year to buy, especially in the first half, with prices down in some areas, leading to greater affordability, and the potential to secure property for a better price with fewer buyers and less competition. First home buyers are likely to be active, as are opportunistic investors.

Don’t listen to all the naysayers, as much of what you hear isn’t true. Instead, do your own research or ask for help on where and what to buy, as there are always good investment opportunities out there, mainly when others are sitting on the sidelines. The key is to make an informed purchasing decision.

If you want independent advice on finding the right property in the right location, contact us for an obligation-free 30-minute strategy session. For guidance on where to start when it comes to property investing, subscribe to our six-part ‘Ready to Buy Checklist’.