Blog

January 30, 2018

2018 | What’s in store for the Market?

At the start of every year, the real estate experts release their predictions on how the market will shift and change over the coming year.

While some of these views often align, others hugely differ providing conflicting information for home owners and buyers alike. So what predictions seem more solid than others for the 2018 property market?

Let’s take a look…

Property Prices on the Rise

The good news is that every analyst believes there will be some growth in property prices for Adelaide this year… the question is, by how much?

Steve Jovcevski of mozo.com.au believes Adelaide’s stable property market will likely continue on a slow and steady path of growth for 2018. “In the last year, Adelaide saw a price increase of 3-4% and I’d expect much the same from the coming twelve months”.

On a more positive note, according to property analyst Terry Ryder of Hotspotting, 2018 will see house price growths for Adelaide of up to 9 per cent, up 4 per cent to this year, with middle and low-market suburbs the star performers.

His claims are based on data published in the Hotspotting’s Spring 2017 Price Predictor Index, which ranks Adelaide ahead of Sydney, Melbourne and Brisbane in terms of the number of growth suburbs.

“Historically, Adelaide has been a very steady market without high peaks as other cities have had.

“But there’s prospect for that to improve with things in the pipeline for South Australia, such as the navy vessel project, which will revive the resource sector and that will flow back into the Adelaide property market.

“As such, we will see better price growth … we will see 7 or 8 or 9 per cent in Adelaide next year, which is a pretty healthy growth.”

Interest Rates & Home Loans

When it comes to the cash rate and mortgages, the views are varied with concern around the impact either decision may have on Australia’s economy and household budgets.

Property Analyst Cameron Kusher of CoreLogic RP Data believes Interest rates are likely to remain on hold in 2018. Kusher thinks there’s little chance that interest rates be lowered either, suggesting that this would risk reigniting the housing market as seen when the RBA last cut rates in the second half of 2016 which contributed to the surge in house prices seen earlier in 2017.

“We’re likely to see regulators and policy makers looking to encourage households with high levels of debt to reduce their exposure while rates remain low,” he says.

Why?

“Because currently, household debt levels are at record highs, a factor which has been called out by the Reserve Bank repeatedly, as well as international institutions such as the OECD, BIS and IMF.”

According to ME Bank head of loans Patrick Nolan, financial markets predict the Reserve Bank will lift the official cash rate off the record low 1.5 per cent level late in 2018, which would have a measurable impact on household mortgage payments,

“[Higher RBA rates] mean repayments will also increase, typically $50 for every 25 basis point rise on a $400,000 loan,” Mr Nolan said.

But even if that doesn’t happen, borrowers should prepare themselves for higher mortgage rates. Although the cash rate has not moved in 15 months, mortgage rates have been creeping higher due to tightened lending policies for Banks.

“Banks have been using their oligopoly pricing power to lift home loan standard variable rates relative to the RBA’s cash rate since 2008, primarily by cutting standard variable rates less than the cash rate during the RBA’s easing cycles,” Morgan Stanley analysts wrote this week.

Whether the Reserve Bank does find a way to raise interest rates in 2018 or not, one thing is clear – mortgage rates are unlikely to decrease in the near future.

2018 Hot Suburbs

The team of property experts and analysts at hotspotting.com.au have locked in their list of 2018 Suburbs to watch, kicking off with those within the Marion council area; a middle-market area, which at the end of 2017 had nine suburbs with continuous price growth.

Oaklands Park, with a median price of $470,000, was the area’s star performer, after sales lifted from 18 to 41 in the past 18 months.

The Charles Sturt council area, also ranked high at 2017 close with growth suburbs including Findon, Grange and Semaphore Park.

On the upper scale, North Adelaide, Walkerville, Semaphore, Prospect, Belair, Woodville South, Fullarton, Somerton Park, Gawler East, Crafers, Craigmore and Elizabeth Park were the city’s top performers, recording double-digit growth in their median house prices in the past 12 months.

For the year ahead, these are their Hot Property suburb tips:

Aldgate

Aldinga Beach

Andrews Farm

Blair Athol

Blakeview

Brahma Lodge

Burnside

Campbelltown

Clovelly Park

Coromandel

Davoren Park

Dover Gardens

Edwardstown

Findon Charles

Flinders Park

Gawler East

Glenelg

Glenelg East

Glengowrie

Glenunga

Grange

Hectorville

Highbury

Hillbank

Hillcrest

Ingle Farm

Largs North

Lobethal

Lockleys

Magill

Mawson Lakes

Mitchell Park

North Adelaide

Adelaide

Oaklands Park

Paradise

Paralowie

Royal Park

Salisbury East

Salisbury North

Seaford

Seaton

Sellicks Beach

Semaphore Park

Sheidow Park

Smithfield Plains

South Plympton

Stirling

Sturt

Tranmere

Willaston