We didn’t see it coming. It’s been a very surprising year.
It started with the sales market continuing to decline from its highpoint in July 2017, passing the negative 10% mark and seemingly heading for even lower lows. Then we had the Federal election. Changes to Negative Gearing and Capital Gains were now off the table and in the absence of Government stimulus, the Reserve Bank began to pull on its only lever – lower interest rates.
I was fortunate to be able to attend an economic briefing delivered by Bill Evans from Westpac in late September. He predicted the low interest rates would lead to a 5% jump in residential real estate prices before the end of the year and a further 5% in the first half of 2020. Well, he was definitely right with the first and will probably score two from two. He believed that the paucity of rental returns would still be higher than other investment options and so the focus would be on buying property.
Speaking of rental returns, there hasn’t been much joy in this market. Oversupply is the culprit for the Lower North Shore in particular. Thousands of new units in St Leonards, North Sydney, Chatswood and Lane Cove are being completed and just as many are still in the construction pipeline. This has led to a 10% fall in rental values over the past eight months and I cannot see this pattern changing until at least mid-2020. Keeping an existing tenant is our main priority.
It’s odd isn’t it, that prices rise at the same time as rents decline? This is another example of the two markets. Sales are influenced by the capacity to borrow and Rents are subject to capacity to pay.
Real estate is endlessly fascinating and I’m enjoying as much as ever as Marriott Lane celebrates 27 years in Crows Nest. We are seen by our clients, prospects and competitors as a leading agency in the vicinity with a great reputation and are currently rated Number 1 by Google (150+ reviews at 4.8 stars) and Rate My Agent (Top 10 in Australia for Property Management).
I would like to thank everyone for the support you have shown us over the year and especially thanks also to all of my staff for their contribution.
I look forward to seeing you again next year and I wish you and your families a very happy festive season and New Year and safe, prosperous and memorable 2020.