Booms, busts, bubbles, oversupply, undersupply, strong growth, no growth the property market has attracted plenty of headlines over the past 12 months. However, in reality, markets in 2016, generally, tracked like they did in 2015.
This is because the fundamentals that drive real estate markets – interest rates, supply, employment and population growth – saw little change over the year. If anything, these metrics moved further in favour of buyers with interest rates being cut twice and the national unemployment rate tightening over the course of 2016.
The most noticeable change, over the past year, has been the significant decline in the number of transactions with 2016 expected to finish with 25% fewer sales then during the last peak in 2002. In Sydney and Melbourne the number of properties listed for sale fell well below normal levels. However, buyer demand remained high thanks to record low interest rates and the strong performance of the New South Wales and Victorian economies. This mismatch between supply and demand saw prices grow strongly; although slightly less than last year. Brisbane saw a slight improvement in conditions compared to last year. Buyer demand has remained robust, listings remain tight and price growth has been steady. The main difference was some inner-city pockets saw an increase in the supply of new apartments. Hobart, Canberra and Adelaide have performed quite well. Price growth has been a little stronger than last year due to fewer properties on the market for sale and increased buyer demand, which was due to low interest rates and higher affordability levels compared to other capital city markets. Perth and Darwin property markets have continued to remain soft. This is in-line with the performance of their respective economies. Listings in both markets have continued to track higher and buyer demand has remained soft thanks to rising unemployment rates.