Buying Property in 2017? You’ll Have to Be Picky

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A rising tide lifts all boats. But in 2017 not all Australia’s property market will be rising. A good choice from a purchaser could see a very positive return. But a bad choice could potentially cost a property buyer thousands.

Melbourne and Sydney up; houses up; Perth down; and apartments down. That is the general commentary from the experts for property in 2017. But the country will look more like a patchwork quilt with some suburbs performing like stars while the next door suburb could prove to be an absolute dog.

And to complicate things, getting finance is going to be harder.

All of this means that you can’t just buy any any-old property and expect to do well – you are going to have to choose wisely.

The East

Over the past 12 months Sydney and Melbourne have done well, increasing by 16.7 and 11.3 per cent respectively. But what for 2017?

Most economists predict continued growth. These predictions can go as high as 18 and 17 per cent for Sydney and Melbourne according to SQM Research and as low as 4 and 2 per cent according to BIS Shrapnel.

But these are average figures and are driven more by the positive forecasts for houses than units. Many of our capital cities are increasingly dominated by apartments. Vast swathes of Melbourne are being developed for units and pockets of Brisbane and Sydney are too. Here the future is less rosy, with AMP predicting as much as 15-20 per cent over the next two years.

property in 2017


The Not-So-Wild West

The property markets of Darwin and Perth are still going backwards. In 2016 Perth dropped 3.4 per cent. And most experts see this trend continuing. The silver-lining though is that, as resources prices firm up, the rate of descent may not be as calamitous!

Related:  By the way what type of investor are you?

Plus Perth has more new apartments being completed – at a time when less-and-less people are working in resources.

While not in the same league, the prognosis for Adelaide is not that good either. The closure of the Holden car plant adds to the perception that it is a city struggling to find its mojo.

The Nuggets

Last year Hobart grew by 14.4 per cent and Canberra by 13.0 per cent. There really is a perception that these are cities on the move (albeit they are much smaller than other capital cities).

I recently visited Canberra with the family. In the ten plus years since I had been there last – it really has changed.  Where once it was just one extended suburban ‘idyll’ it now has lively neighbourhoods and funky apartments by the lake.

Plus a relatively robust and well-paid public sector means that there is significant underlying demand.

The Curve-Ball

Getting finance is going to be even harder in 2017. The banks are starting to ratchet up their interest rates – mainly due to international factors.

But the Australian Prudential Regulation Authority (APRA) is also having an impact. It is forcing the banks to toughen their lending criteria – and it may get even tougher.

APRA has told the banks that it does not want to see them increasing their lending to investors by more than 10 per cent a year and some commentators, such as Martin North of Digital Finance Analytics, have said even 10 per cent is too generous. If so, getting finance will become even tougher.

Related:  How a Quantity Surveyor's report can help with your cash flow.

So, if you are thinking about buying property in 2017, there are two things you should do.

  1. Get your finance in order. Talk to your Origin broker to make sure there are lenders who will lend you what you need.
  2. Talk to a property expert and do your research on where are the star performers and where are the stinkers.

Get in touch with our financial advisor at Chan and Naylor

Graeme Salt - Chan & Naylor Finance

Graeme Salt

Disclaimer: This article contains general information; before you make any financial or investment decision you should seek professional advice to take into account your individual objectives, financial situation and individual needs. Click for more detail regarding this disclaimer.



One response to “Buying Property in 2017? You’ll Have to Be Picky”

  1. Peter Bukowski says:

    Good Morning Graeme, I have beena loyal customer of C&N for many years and have seen Eddie grow his buisness from early days .

    The monthly cirulars sent out are very educational.

    You are mentioned as the expert in the property world (presume finance and knowledge on properties).

    My question is, I am arranging to purchase for my daughter her ist investment property which is in Warrilla.It is a mid 80s built solid brick 2 bed,1 bath, 2 garage townhouse located approximately 100 metres walk to Warrila Beach.The unit is a cluster 06 t’houses.I have done my homework and note it is walking distance to the central shopping centre with many other business’ surrounding the shopping centre.Schools are short distances including clubs.I am buying the place for $480k and anticipate $400/wk rent.
    I have read some statistics and which show low vacancy , good growth past 3 years.The locaction being so central to all requirements I feel the value of the location is ideal for the future as I see Sydney is overcrowded and very difficult to buy into and the next move is the Illawarra area similar to what has been happening in Newcastle.These areas as I see it are still affordable.

    I would like for you to give me your expert opinion on the purchase ie are my assumptions reasonable to the area and the potential value of the purchase etc.Kind Regards.Peter.

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