recently reported that Sydney house prices were down -1.3 per cent in the last quarter ending in November 2017, and Darwin house prices had receded -2.7 per cent. The report found a combined capital city drop of -0.1 per cent in the last month.
Flags are raised when we hear these figures, which is understandable. Sydney and Darwin make up a significant proportion of the Australian housing market.
But a decline in numbers in some regions over a certain period, is not a reason to panic.
Look at the big picture
These figures are taken over a three-month or one-month period, and don’t necessarily predict what is to come. While economists are on alert, there is no consensus about what will happen in the future. No-one can be certain.
What we can be sure of, is that the house market inevitably rises and falls. And after such a strong growth in house prices, particularly in Sydney, it is reasonable to expect that the market will stagnate slightly. House prices fell in 2015 and many times before. But that’s not to say they won’t come back up again.
Also, averages taken in Sydney and Darwin do not speak for the whole of Australia. They don’t even reflect all parts of these regions. Sydney and Darwin are diverse; many parts of both cities won’t experience decline in value.
If we are focusing on recentalone, we see that there was a 0.2 per cent rise in combined regional values in the last quarter. Melbourne house prices increased by 1.9 per cent. Hobart increased by 3.3 per cent. So, what’s going on in Sydney won’t necessarily impact other regions.
A slowing of house prices is not a reason to sell up quickly. A rushed decision could mean you lose money, not only on the value of the property, but on the cost of buying and selling. Instead, take a long-term view of your investment. Pay more off your house now so you have more equity later on. And who knows? The market might bounce back again relatively soon.
Reports of falling house prices are only theoretical until you actually sell. Other than selling at a lower price, the only way a drop in house prices will affect you at this time is if you are looking toand want to access your equity. A lower median value may affect the amount you can borrow.
Rather than selling up, pay attention. Keep in touch with your Smartline Adviser and your real estate agent. Your Adviser knows the financial landscape, and your real estate agent knows your local property market. They will help you see the bigger picture. Your Adviser in particular knows your individual circumstances, and can make recommendations that suit you.