Listed here are some of his most relevant market predictions for property investors:
Reserve Bank rate hikes on the horizon.
Driscoll virtually guarantees that the banks will increase rates again at some point next year, regardless of the Reserve Bank’s decision. “For those buying property now, my advice is to choose a loan with a fixed interest rate because the reality is, rates won’t stay at record low levels for much longer,” he said.
Lenders are becoming prudent.
Driscoll expects more macro-prudential measures in 2017. He says lenders will become more prudent when it comes to lending due to perceived risks. “Even the International Monetary Fund believes property affordability in [Australia] is an issue and homeowners are stretching themselves too far.”
While he expects some Sydney investors to head north to Brisbane or other areas for their perceived value, he cautions investors about venturing recklessly into new markets. “All that glistens isn’t gold, and sometimes property is cheap for a reason,” he warns.
The apartment oversupply will continue, and so will the need for more affordable detached housing.
This year was the first year on record that saw more apartments constructed than houses, and Driscoll expects this trend to continue into 2017. He describes the current market as being “out of kilter” since Sydney has an oversupply of apartments and not enough detached dwellings.
“It’s time councils are made more accountable to ensure we have a more appropriate and evenly weighted housing mix. In some suburbs, it is likely that we will get to the point where the amount of units will exceed demand. Rental vacancy rates may start to climb, leaving more choice for tenants, but I think prices will remain steady because of the burgeoning population.”
More people will rent by choice.
While conventional thinking says people who cannot afford to buy property resort to renting, Driscoll says there will be more people next year who will rent by choice even if they own property.
“People may own property but choose to rent close to the city for a better lifestyle or close to their place of work for a better work-life balance, but also because people see the financial benefit of renting where they live and investing in properties, with most investment property expenses being tax-deductible.”
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