2016 has proven to be a significant year in the residential property sector, characterised by steadily increasing housing prices, slightly stagnating rental prices, and an oversupply of property.
Somewhat surprisingly, there has been an increase in activity in the rural market. While growing developments have provided a steady stream of properties, it would appear that buyers are more interested in the increasingly rare commodity of larger lots. Substantial lots in the vicinity of 1000 sqm are quick to sell, while comparatively smaller lots – those around 350-450 sqm – are spending more time on the market. Still larger lots – closer to 3000 sqm – are generating substantial interest for those looking to subdivide. Simply put, the demand for standard lots is outweighed by an oversupply in this category.
Owner Occupier Corner
For the most part, Owner Occupier interest is focused on larger, rural properties. For those who may have lived in more suburban areas surrounding the Macarthur region, areas such as Camden hold great appeal for attaining a rural outlook and additional greenspace on larger lots.
For those looking to buy and rent, there is a strong supply of 4 bed, 2 bath, 2 car homes, in prime locations such as Oran Park and Gregory Hills. However, as we approach Christmas and the new year, the market will quiet down some, before picking up again with new availabilities following the back-to-school period.
On the leasing front, we’re seeing an environment whereby rental prices have not kept up with house prices. Where a $500,000 property can yield a return of $500-$550 per week, a $700,000 property may only yield the same. This is due to inflated house prices, an oversupply of similar houses, and a low demand from renters.
At the moment, interest rates are very attractive for buyers. How soon we will see an inevitable increase in rates is difficult to predict. However, with large amounts of borrowed capital, buyers should remain cautious of the potential for significant increases in repayments should interest rates increase. Looking offshore to markets such as Japan and the USA would indicate that, should our market follow suit, interest rates will not decrease any further for the foreseeable future.