Property Pulse

In time-honoured tradition, the current stockmarket correction has investors wondering whether there will be a mass exodus into property. I don’t think a stampede is imminent '” but the correction is a reminder that sooner or later, investors will see stocks as overvalued and the market will fall.
When this happens, investors who want capital growth with less volatility will look for somewhere safer to park their money, such as residential property.

Just like the stockmarket, property is cyclical. If you wait until the stockmarket corrects before you act, everyone else will be doing the same thing. Stronger demand will push up property market values. This is great for vendors but not for investor purchasers, who miss the bottom of the market and therefore the opportunity to maximise capital growth by being in the market for the whole cycle.

In Melbourne, for example, we saw this happen during the last growth cycle, when people who bought in 1999-2000 experienced significant growth, while those who bought in 2001-02 only benefited from one or two years’ growth before the market slowed in late 2003.

While the property market upswing will begin at different times in different cities, I believe property prices '” on a nationwide basis '” will stabilise over the next 12 months. This gives investors an excellent window of opportunity to analyse the market thoroughly and buy a quality asset at a good price. This is a much better strategy than waiting until the stockmarket corrects, buying when the property market upswing has already started, and missing out on precious capital growth.

AUCTION ACTION

Melbourne is gearing up for the peak of spring’s auction season. Many vendors postponed starting their four-week auction campaigns until after the AFL Grand Final. They’re now in the final stages of their campaign periods, which will culminate on 22 October when there are expected to be more than 800 auctions.

Meanwhile, advertised auctions have fallen slightly this week: 508 compared with 542 last week. The inner north has dropped significantly, from 63 auctions to 37. A sharp dip in supply can be a trigger for overheated bidding among buyers who are not aware the market will rebound next week. So keep your cool and stick to your budget.

On the other side of the coin, auctions in the inner east increase from 51 to 72, providing good buying opportunities.

Overall auction numbers in Sydney are holding steady, at 272 compared with 268 last week. Within this context, the inner east is up substantially, from 59 to 78, while the upper north shore jumps from 26 to 42. This is good news for buyers trying to get a foothold in Sydney’s more expensive markets. By comparison, auction numbers in Sutherland Shire drop by from 27 to eight, and in Liverpool from 16 to three.

In Brisbane, last week’s sharp jump in advertised auction numbers, from 205 to 307, is balanced out by an equally sharp drop this week '” back to 220. The biggest drop was in the northern suburbs, where numbers have plummeted from 32 to 15.