Property Report: Fortune favours the bold

It’s difficult to believe that February is already upon us and 2019 is well under way.

As with any new year, our levels of expectation and hope are at their highest point. So what can
we expect from our property market in the coming year?

We kicked off with some good news in the form of the interest rate being kept as it is for now, however the MPC (Monetary Policy Committee) has alluded to the possibility of a series of small interest rate increases throughout the year to counter inflation.

While improving, an overall lack of confidence remains a drawback for the economy and property market, and the next few months is likely to remain subdued, both on the economic and property front.

The upcoming elections are likely to bring a turning point, but for now, the following factors will continue to be a feature of the market: Subdued price growth – Recent bank data shows that property fundamentals continue to decline somewhat with average price growth expected to remain in the lower 4%-6%.

This doesn’t mean to say that there are not opportunities to see better returns on the North Coast, but to stand out, homeowners should consider smart ways to add value to their homes by reinvesting in certain areas according to market demands and expectations.

Smaller properties – There will likely be a continued move to smaller, more manageable properties particularly within sectional title complexes and lifestyle estates. As consumers continue to feel the pinch of rising inflation and a high cost of living, the luxury of wasted space or excessive utility and maintenance costs mean downsizing will remain a feature of our property market.

With this said, going smaller does not mean sacrificing on quality, just unnecessary quantity.

Cautious, but opportunistic buyers – As mentioned, consumers will have to absorb a number of cost rises including utility costs hikes in the early part of the year which will further dampen their ability to spend in the economy and on property. This, together with remaining policy concerns around land security, will mean that buyers will remain cautious and highly selective.

Having said this, it also represents a great opportunity to potentially take advantage of a slower market, by purchasing property before the inevitable upward post-election curve.

More stock, slower sales – Increased stock levels will mean that properties will take longer to sell. The average time to sell a home ranges from three-and-a-half months to about six months and longer at the top end of the market.

Sellers need to take this into consideration when making decisions about their next move. Favourable financing climate – The banks are still granting bonds and conditions remain favourable as the major retail banks look to grow their mortgage books in a low volume market. Approval rates, rate concessions to buyers and loan-to-value criteria (deposit requirements from the banks) will likely remain favourable as the banks compete for business.

While 2019 looks to be a story of two halves, primarily revolving around our mid-year election, this is nothing we have not seen before.

The great news is that we have some incredibly exciting developments planned for the North Coast and demand for our existing products and lifestyle remains at an all-time high.

While there will certainly be stability for the cautious, opportunity beckons for the bold.

– Tim Johnson is the Principal and Director of Seeff North Coast.