Melbourne Property Market Set up for Strong Year

As is traditional at the turn of the year, the media released several reports in late December reviewing 2015 and speculating over the broader property market’s likely performance in 2016.

According to an Australian Financial Review market performance review of 2015, Melbourne and Sydney prices grew by a total of 11% over the year, with Brisbane and the Gold Coast up 4.5%, Adelaide flat and Perth down almost 4%. Comparing the forecasts for the year made at the beginning of 2015 with the actual results, SQM Research was the most correct in its predictions. Domain and Fitch were said to have got it “very wrong”, while CoreLogic’s predictions were described as having “mistimed the slowdown” – perhaps a pointer as to which predictions for 2016 are most likely to be accurate.

Looking forward, the AFR reported there’s a general consensus between both RP Data and Domain that “cool winds will blow” throughout this coming year in both Sydney and Melbourne. In stark contrast though, SQM Research is far more bullish, with managing director Louis Christopher continuing to predict Melbourne will overtake Sydney, enjoying healthy growth in 2016 of between 8% and 13%.

Interestingly, the Australian reported that despite a slowing market, demand from foreign investors is set to stay strong throughout 2016, particularly for prestige property. A recent NAB survey estimates 19% of all new apartment sales and 14.9% of all new home sales in the three months to October were to foreign buyers.

While the Melbourne market traditionally remains subdued until mid-January, many local sellers will be preparing their homes for an early 2016 sale, while buyers will be using the internet to research the market. With buyer activity expected to be strong on the back of the optimism of a new year and continuing low interest rates, there are likely to be good opportunities for both buyers and sellers to transact.