Australia is set to experience a more widespread growth in the next few years as more regions start to catch up, according to a recent study by Propertyology.
The study points to a more robust growth in median dwelling prices over the next five years. The housing market witnessed a recovery in the middle of last year, triggered by the easing in serviceability rules and the Reserve Bank of Australia’s rate cuts, said Simon Pressley, head of research at Propertyology.
"The 2019 mid-year momentum change in Australian property markets was triggered by the stimulus of three interest rate cuts. It's a sugar fix of sorts. But it doesn't change underlying fundamentals," he said.
Pressley said this should encourage property buyers and investors to consider medium-term fundamentals when making their decisions.
"Those contemplating participating in 2020 property markets would be wise to focus on the fundamentals of a balanced diet," he said.
"Unstable" market conditions
Pressley said market conditions appear to be "unstable" despite the substantial price gains reported in bigger cities like Sydney and Melbourne.
"Given the significant policy disruptions, I consider it to be a completely futile exercise to attempt to forecast actual rates of property price growth for 2020, and anyone who buys property based on the potential of a one-year result is in the wrong game anyway," he said.
While the outlook for the market is "as good as it has been for many years", Pressley said investors should not be overly enticed by the strong showing in Sydney and Melbourne. He said there are plenty of superior investment locations elsewhere with conditions that are far more stable.
"History is proof that the best performers often aren't among the capital cities, so anyone who invests in Australian real estate without analysing the fundamentals of all options is accepting the very high odds that they won't do anywhere near as well as they could," he said.
In fact, some of the best-performing markets three years ago were outside the capital cities. For instance, Tasmanian city Glenorchy witnessed a 40% median house price growth over the last three years. This was stronger than the 2.4% gain in Sydney, 12.8% growth in Melbourne, and 8.3% increase in Brisbane during the same period.
Other top-performing markets over the past three years were Bass Coast, Macedon Ranges, Snowy Monaro, Baw Baw, and Geelong. These areas witnessed their median house values balloon by 29% to 37%.
Setting priorities this year
Pressley said investors should spend time early this year to set their strategies and study locations that are likely to produce long-term gains.
The projections of further rate cuts by the Reserve Bank of Australia make the market more attractive to potential investors.
"This means that, even with a very small deposit, the annual cost to hold an investment property is near zero, so whether you're using cash or equity in existing property, do something proactive for your future and get in the game this year," he said.