The year-end holiday period is almost upon us, heralding the end of 2018 for the housing market.
No question that this past year has not been particularly friendly to the Sydney and Melbourne markets… muted auction clearance rates (mid-to-low 40%) and sliding median prices (year-on-year, Sydney down 8% and Melbourne down 6%).
Most media commentators are now backing in more of the same for 2019.
More ‘bad news’ to further erode waning buy-side confidence (which, by the way, only underpins the entire value chain of the housing market) leading into 2019 – a year that may yet see structural factors (such as the Hayne recommendations and changes to negative gearing) extending and deepening the downturn.
The lower than expected national GPD results for September quarter (0.3%) could also mean a tougher 2019 from a systemic risk viewpoint.
Hmm… no much holiday cheer.
If you’ve been holding off buying into the Sydney or Melbourne markets over this past year expecting prices to continue to moderate, the good news is you’re not wrong. And the bad news is you’re not alone.
Buying into a falling market when you’re uncertain of how deep and sustained the fall will be is clearly counter-intuitive. That’s the good news.
But if you’re waiting for ‘others’ noticeably coming back into the market to make you move, you’ll be buying after the prices have bottomed out – ‘others’ coming back into the market will increase the pool of willing buyers… so you’d be back to buying in a rising market with increasing buy-side competition.
Trying to call the bottom of the housing market to buy is like trying to call the top of the market to sell… very few get it right and no-one has ever successfully made an accurate prediction every time across multiple market cycles over the long term.
Recall 2015 – there were more than a few respected commentators forecasting a price crash in the market within the next 12 months? Well, not only was there no crash at that time but the market continued a strong bull run for a further 2 years…
If the ‘experts’ don’t get it right every time with all their sophisticated research and modelling, what chance for us individual buyers?
Market timing – the investment strategy of predicting the top and bottom of the market to sell and buy – would likely only work for us individual property buyers when framed against our particular life circumstances of need, affordability and holding period.
If that means that if you’re comfortable – based on your need, affordability and holding period – buying say, 5 Adelaide Avenue Deakin 2600, at a time and price point that I’m not, it doesn’t make it wrong for you.
If you’re taking time off over the year end, have a safe holiday period – here’s hoping that 2019 brings back some confidence into the eastern seaboard housing markets..