Sydney Property Market Outlook January 2015

As I stated back in July, forecasts are not reliable. Looking to the stars or throwing darts can have more success. To me, playing it safe in the property market is about following the trend or protecting with a high yield (return on the investment).

As an example of how things can change; not so long ago we were flooded with articles about the US being finished as the financial powerhouse of the world. Well look who is propping up the world now? And as for oil, it has halved in the last 5 months – no one saw that coming.

Rest assured, success in the market depends on your ability to profit from trends.

The current cycle…

The trend is still intact and the market is still moving upward. Interest rates are still accommodative with yield in the 10-year bonds hitting fresh record lows. This tells us that more interest rate cuts are to come…..and the yield story is still intact (buying assets for their return on the investment). The end result is more price growth, but probably not as much we just had last year.

As discussed previously, we had and are likely still in ‘the pause we had to have’. Historically the pause is the buying opportunity. Has it finished? Maybe. We will have a better picture by March.

Fuel for the fire… 

Christmas sales are not just limited to David Jones and Myer. The whole of Australia’s real-estate is on sale thanks to currency being worth 82 US cents (a long way from the highs of $1.10). So for the overseas buyers Australia is on Sale – our European counterparts could only dream of having this natural currency mechanism.

Petrol at the pump is cheaper, $1 for E10? The great global tax cut means more money in our pockets.

Now the biggy for the economy, Tourism.  After being in the doldrums for years it might just take off due to the cheap dollar.  Last time tourism took off was the last great property boom in 2000. An increase in tourism will drive jobs, investments and could even be good news for property in regional areas and especially Queensland.

So where to from here?

The trend is up with no real signs of it ending yet.

My recent trip to the NSW mid north coast shows real-estate is still slow up there. There has been price appreciation in the lower price ranges (far from good times), and to me these are all signs of a trending higher market.

I will review the outlook in 6 months and see if global or local conditions change to affect the current balance of price appreciation.

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