Sam Khalil’s property investment outlook for 2018

Sam Khalil’s property investment outlook for 2018
Joel RobinsonDecember 4, 2017

DPN’s Managing Director, Sam Khalil, looks back on 2017. He gives us his take on property investment around the country and what lies ahead for 2018. 

A sobering year as APRA measures take hold

What a year that was. 2017 was perhaps the bleary eyed come down from the last five years of heightened excitement and frenzied activity. 

Measures introduced by APRA last year have had an instant effect on banks and investor lending. It has put the brakes on the lending system. Banks have increased the cost of interest only investor loans. This has had an effect on the number of investors entering the market. This in turn has cooled down prices.

Sydney slow down

The APRA measures have taken greatest effect in Sydney. We’ve seen clearance rates drop from the record highs of 85% down to around 55%, its lowest level for two years. And in September, traditionally, the strongest period of the year for Sydney, recorded on average 68% clearances. All this is despite a drop in the number of properties on sale. All this indicates how cautious and muted the Sydney market is.

However, those who speak of Sydney’s property market demise or talk about a “bubble bursting” are, in my opinion, taking a myopic view. From 2012 to 2017, Sydney was Australia’s best performing market. Let’s not forget that from 2004 to 2012 Sydney was the worst performing market. In the average returns from 2017 you’ll see quite a sensible growth across Sydney. When you average it out the returns are under 10% in all suburbs over those eighteen years. Sydney is now returning to what it normally does in the property cycle. It’s having a minor correction or plateau and will slowly grow again.

Brisbane steadily taking off

Brisbane is beginning to move. It won’t have as dramatic growth as Sydney or Melbourne. But it’s being helped along by increased interstate migration especially in south east Queensland. Brisbane is over supplied in the inner city market, particularly in apartments. This has led to a real plunge in prices for inner city flats, down by 6 per cent over the year. However Brisbane is slowly taking off. There’s some serious money rolling into the city: like a $3 billion casino project in Brisbane’s CBD. And there’s hefty investment into infrastructure projects; investment in rail and road. Rental prices are growing. You won’t see spikes or plunges in the Brisbane market. All indications are that it will be the steadiest market for some time.

Melbourne still buoyant

Melbourne has been on a strong upward trajectory and this year overtook Sydney for percentage increase. It has had a 10% value growth over 2017 according to Core Logic. Melbourne suffered a glut in apartments recently and is still recovering from that. Yet while housing prices continue to grow in Melbourne they’re not at their dizzying peaks. It is high levels of overseas

migration that is keeping the housing market buoyant, which is leading to constant housing demand.

Hobart, Adelaide and Perth

Hobart has been a surprising achiever over the last year. Its growth of 13.6% capital gains is a record for any capital city. This is partly due to strong interstate migration and partly because of its scarcity of buildings. Another factor is the flourishing tourism market. This is helped by the MONA museum and its cultural attractions. However, with a small population it’s hard to gauge the city’s long-term prospects.

Adelaide has remained steady. Both it and Darwin don’t have enough critical mass to yet see a surge in prices. Perth is slowly hauling its way back from the mining collapse and is still some way from being competitive.

Wollongong 

Wollongong is the third most expensive city in Australia following Sydney and Melbourne. Land development is still tight in that region. The demand for property remains very high. It’s attractive to both investors and homebuyers due to its proximity to Sydney.

So where does all this leave us?

As I’ve said before, Australia is not one single property market but many. There are as many property markets as there are suburbs. As the above breakdown shows, while parts of Sydney are at a plateau, other areas are thriving. So some investors may be wary of entering the market next year. But the canny investor will use the reduced competition, low interest rates and affordable house prices to strategically snap up a bargain.

SAM KHALIL is founder and director of Direct Property Network.

Joel Robinson

Joel Robinson is a property journalist based in Sydney. Joel has been writing about the residential real estate market for the last five years, specializing in market trends and the economics and finance behind buying and selling real estate.

Editor's Picks

"One of the rarest finds on the Mornington Peninsula": Inside Hali Dromana
BLVD pursues WELL Certification as demand for healthy homes grows
Off the plan apartment buying 101: What is BESS?
First look: Freecity lodges Crows Nest TOD tower
Walkability drives demand at Stones Corner’s latest apartment development, Corner House

Related Projects

16-22 Maud Street, Newstead QLD 4006
16-22 Maud Street, Newstead QLD 4006
16-22 Maud Street, Newstead QLD 4006
Price
Contact agent
35-37 Mount Street, Prahran VIC 3181
35-37 Mount Street, Prahran VIC 3181
35-37 Mount Street, Prahran VIC 3181
Price
Contact agent
118-124 Benelong Road, Cremorne NSW 2090
118-124 Benelong Road, Cremorne NSW 2090
118-124 Benelong Road, Cremorne NSW 2090
Price
Contact agent
118-120 Matthew Flinders Drive, Cooee Bay QLD 4703
118-120 Matthew Flinders Drive, Cooee Bay QLD 4703
118-120 Matthew Flinders Drive, Cooee Bay QLD 4703
Price
Contact agent
26-62 Kinross Road, Thornlands QLD 4164
26-62 Kinross Road, Thornlands QLD 4164
26-62 Kinross Road, Thornlands QLD 4164
Price
Contact agent
9-11 Baroonba Street, Whitebridge NSW 2290
9-11 Baroonba Street, Whitebridge NSW 2290
9-11 Baroonba Street, Whitebridge NSW 2290
Price
Contact agent
18 Ransley Street, Penrith NSW 2750
Perle, East Side Quarter, Penrith - 18 Ransley Street, Penrith
18 Ransley Street, Penrith NSW 2750
Price
Contact agent
Ernest Cavanagh Street, Gungahlin ACT 2912
Raya, Gungahlin - Ernest Cavanagh Street, Gungahlin
Ernest Cavanagh Street, Gungahlin ACT 2912
Price
Contact agent
39 Browning Street, South Brisbane QLD 4101
39-41 Browning Street, South Brisbane - 39 Browning Street, South Brisbane
39 Browning Street, South Brisbane QLD 4101
Price
Contact agent
675 Gardeners Road, Mascot NSW 2020
Kiara North, Mascot - 675 Gardeners Road, Mascot
675 Gardeners Road, Mascot NSW 2020
Price
Contact agent
187 Salvado Road, Jolimont WA 6014
Jolie, Jolimont - 187 Salvado Road, Jolimont
187 Salvado Road, Jolimont WA 6014
Price
Contact agent
47 Maning Avenue, Sandy Bay TAS 7005
Grace Residences - 47 Maning Avenue, Sandy Bay
47 Maning Avenue, Sandy Bay TAS 7005
Price
Contact agent
Cove Lane, Narooma NSW 2546
Cove, Narooma - Cove Lane, Narooma
Cove Lane, Narooma NSW 2546
Price
Contact agent
52-56 Ramsay Street, Five Dock NSW 2046
Ava, Five Dock - 52-56 Ramsay Street, Five Dock
52-56 Ramsay Street, Five Dock NSW 2046
Price
Contact agent
2375 Gold Coast Highway, Mermaid Beach QLD 4218
The Alfred - 2375 Gold Coast Highway, Mermaid Beach
2375 Gold Coast Highway, Mermaid Beach QLD 4218
Price
Contact agent
129-131 Russell Ave, Dolls Point NSW 2219
ALLURE COLLECTION - 129-131 Russell Ave, Dolls Point
129-131 Russell Ave, Dolls Point NSW 2219
Price
Contact agent
62 Constitution Avenue, Parkes ACT 2600
The Eastbourne on Commonwealth Park - 62 Constitution Avenue, Parkes
62 Constitution Avenue, Parkes ACT 2600
Price
Contact agent
155 Old Burleigh Road, Broadbeach QLD 4218
Sandpiper, Broadbeach - 155 Old Burleigh Road, Broadbeach
155 Old Burleigh Road, Broadbeach QLD 4218
Price
Contact agent
33 Vulture Street, West End QLD 4101
33 Vulture Street, West End QLD 4101
33 Vulture Street, West End QLD 4101
Price
Contact agent
19 Governor Terrace, Murarrie QLD 4172
Park Hill Village Collection, Murarrie - 19 Governor Terrace, Murarrie
19 Governor Terrace, Murarrie QLD 4172
Price
Contact agent
122 Marine Parade, Miami QLD 4220
Nalu, Miami - 122 Marine Parade, Miami
122 Marine Parade, Miami QLD 4220
Price
Contact agent
34 Jacaranda Place, Indooroopilly QLD 4068
34 Jacaranda Place, Indooroopilly QLD 4068
34 Jacaranda Place, Indooroopilly QLD 4068
Price
Contact agent
167 Old Burleigh Road, Broadbeach QLD 4218
167 Old Burleigh Road, Broadbeach QLD 4218
167 Old Burleigh Road, Broadbeach QLD 4218
Price
Contact agent
21 Queens Way, Yeerongpilly QLD 4105
Yeerongpilly Green - 21 Queens Way, Yeerongpilly
21 Queens Way, Yeerongpilly QLD 4105
Price
Contact agent
445-449 River St, Ballina NSW 2478
Solhaven - 445-449 River St, Ballina
445-449 River St, Ballina NSW 2478
Price
Contact agent
52 Sunset Boulevard, Surfers Paradise QLD 4217
52 Sunset Boulevard, Surfers Paradise QLD 4217
52 Sunset Boulevard, Surfers Paradise QLD 4217
Price
Contact agent
6 Jack Brabham Drive, Hurstville NSW
Horizon Hurstville - 6 Jack Brabham Drive, Hurstville
6 Jack Brabham Drive, Hurstville NSW
Price
Contact agent
49 Seena Drive, Edgeworth NSW 2285
49 Seena Drive, Edgeworth NSW 2285
49 Seena Drive, Edgeworth NSW 2285
Price
Contact agent
Lot 118 Ocean Steamers Road, Port Adelaide SA 5015
Lot 118 Ocean Steamers Road, Port Adelaide SA 5015
Lot 118 Ocean Steamers Road, Port Adelaide SA 5015
Price
Contact agent
203 Ashmore Road, Benowa QLD 4217
203 Ashmore Road, Benowa QLD 4217
203 Ashmore Road, Benowa QLD 4217
Price
Contact agent
774 Ripley Road, Ripley QLD 4306
774 Ripley Road, Ripley QLD 4306
774 Ripley Road, Ripley QLD 4306
Price
Contact agent
6 Homelea Court, Rivervale WA 6103
6 Homelea Court, Rivervale WA 6103
6 Homelea Court, Rivervale WA 6103
Price
Contact agent
7002 Ripley Road, Ripley QLD 4306
7002 Ripley Road, Ripley QLD 4306
7002 Ripley Road, Ripley QLD 4306
Price
Contact agent
3 Delos Way, Sorrento WA 6020
3 Delos Way, Sorrento WA 6020
3 Delos Way, Sorrento WA 6020
Price
Contact agent
77 Sutton Street, Redcliffe QLD 4020
77 Sutton Street, Redcliffe QLD 4020
77 Sutton Street, Redcliffe QLD 4020
Price
Contact agent
181 Prospect Road, Prospect SA 5082
181 Prospect Road, Prospect SA 5082
181 Prospect Road, Prospect SA 5082
Price
Contact agent
593-595 Albany Highway, Victoria Park WA 6100
593-595 Albany Highway, Victoria Park WA 6100
593-595 Albany Highway, Victoria Park WA 6100
Price
Contact agent
1-28, 40 Civic Way, Rouse Hill NSW 2155
1-28, 40 Civic Way, Rouse Hill NSW 2155
1-28, 40 Civic Way, Rouse Hill NSW 2155
Price
Contact agent
93-97 Bay Street, Brighton VIC 3186
93-97 Bay Street, Brighton VIC 3186
93-97 Bay Street, Brighton VIC 3186
Price
Contact agent
1F Ashline Street, Wollert VIC 3750
1F Ashline Street, Wollert VIC 3750
1F Ashline Street, Wollert VIC 3750
Price
Contact agent
119 Queen Street & 86 King Street, Bendigo VIC 3550
119 Queen Street & 86 King Street, Bendigo VIC 3550
119 Queen Street & 86 King Street, Bendigo VIC 3550
Price
Contact agent
22-38 & 27-31 The Avenue, Coburg VIC 3058
22-38 & 27-31 The Avenue, Coburg VIC 3058
22-38 & 27-31 The Avenue, Coburg VIC 3058
Price
Contact agent
1260-1272 Malvern Road, Malvern VIC 3144
1260-1272 Malvern Road, Malvern VIC 3144
1260-1272 Malvern Road, Malvern VIC 3144
Price
Contact agent
472 Regency Road, Prospect SA 5082
472 Regency Road, Prospect SA 5082
472 Regency Road, Prospect SA 5082
Price
Contact agent
273A Gorge Road, Paradise SA 5075
273 Gorge Road, Paradise SA 5075 - 273A Gorge Road, Paradise
273A Gorge Road, Paradise SA 5075
Price
Contact agent
270 The Esplanade, Miami QLD 4220
270 The Esplanade, Miami QLD 4220
270 The Esplanade, Miami QLD 4220
Price
Contact agent
5 Charles Street, Charlestown NSW 2290
5 Charles Street, Charlestown NSW 2290
5 Charles Street, Charlestown NSW 2290
Price
Contact agent
208 Meadowlands Road, Carina QLD 4152
208 Meadowlands Road, Carina QLD 4152
208 Meadowlands Road, Carina QLD 4152
Price
Contact agent
27-29 Dethridge Street, Northgate QLD 4013
27-29 Dethridge Street, Northgate QLD 4013
27-29 Dethridge Street, Northgate QLD 4013
Price
Contact agent
Lot 100 Maryvale Road, Athelstone SA 5076
Lot 100 Maryvale Road, Athelstone SA 5076
Lot 100 Maryvale Road, Athelstone SA 5076
Price
Contact agent