Have you been watching the residential real estate market lately? Thinking of investing, downsizing or exchanging a town lot for a few acres?
If you find yourself hesitating when it comes to making a purchase, you’re not alone.
A combination of election uncertainty and the associated disquiet about its effects on Negative Gearing and Capital Gains Tax, as well as the now-closed Royal Commission into banking, have all impacted the market, causing a drop in sales which agents are hoping will pick up in the second half of 2019.
“Those who don’t have to buy and don’t have to sell are sitting on their hands at the moment,” says Bateman Bay Elders agent John Haslam, who has seen his overall sales cut in half since 2017, from about 80 per month to 40.
However, the Eurobodalla, Bega Valley, and Snowy Monaro have all seen gains in housing prices over the last few years – though sometimes in wildly different amounts, even within the same shire.
The Bateman’s Bay area that Mr Haslam works in has seen a modest 10% rise in the median house price since last year – which sits in the mid 400,000’s, he says.
But in the Snowy Monaro, Cooma has seen a jump in its median price with the construction of Snowy 2.0 looming.
“Since the announcement of the Snowy Hydro 2.0 scheme in 2017, investors have been on the boil,” says Don Minchin, proprietor at Raine and Horne, Cooma.
“There’s been a lot of interest in residential investment at the low end of the market and I’ve taken calls from as far away as Darwin and East Timor.”
Construction of Snowy 2.0 is expected to roll until 2025 and anticipation of the number of workers the project will bring to the area has driven the low end of the housing market up by 35 percent over two years, Mr Minchin explains.
Although Raine and Horne, Cooma has also seen unprecedented activity in the high end of the residential market, Mr Minchin says that first home buyers have not yet been priced out in the area, with a median house price of $295,000.
“We are seeing prices that two years ago you wouldn’t have thought possible,” Mr Menchin, who has 37 years experience in the Cooma market, says, “I think that’s the result of super coming home to roost.”
Despite it’s proximity to ski-season tourism in Jindabyne and Thredbo, Cooma has been slow to join the holiday rental market, Mr Minchin says.
This is in stark contrast to the Eurobodalla, which, as Mr Haslam explains, has seen a high proportion of lifestyle properties sales in the last 12 to 18 months.
“In the first four months of 2018, we sold 17 properties with a value of over a million, and this year, in the same time period, we’ve sold seven.”
Like Cooma, Bega has seen gains in house prices directly affected by a big construction project – in this case, the new South East Regional Hospital, which opened its doors in March 2016.
Rod McDonald, of Elders, Bega, says the hospital-related rise in the median house price in 2015 has stayed strong, partly driven by the number of people retiring to the Bega Valley or even buying in the Bega area and commuting to work in Canberra.
“People can sell their homes in Canberra, buy a really nice home in Bega or on the outskirts on a small acreage and still have money left in the bank,” he says.
But Mr McDonald has also seen a lull in the market recently.
“We were expecting a bit of a dip in the first six months of 2019,” he explains, “the Royal Commission into banking left people uncertain about their access to funds and the demand for housing dictates the supply.”
With the Royal Commission now over, Mr McDonald expects banks will ease up a little but there is still the upcoming Federal Election to contend with.
“It’s just luck that we’ll have two elections in the first six months of this year,” he says sarcastically “and people always withdraw their spending in the lead up to an election – we’re scared of the unknown.”
The median house price in the Bega area was $382,500 in December 2018 and it’s still in that range but, according to Mr McDonald, the slight dip in the market has meant that there is less negotiation with mid-range pricing, “what you see is likely what you’ll pay.”
Time will tell where our markets will end up but as Mr Haslam says, “buyers are holding back at the moment. If you need to sell, you’d better be offering a bargain.”