2015 has certainly been a memorable year.
Buoyant property markets flirted with global and financial volatility, while technology and celebrity fought global terrorism in the battle for our hearts, minds and attention.
So what do we have to look forward to in the next year?
Here’s my 7 predictions for the Australian property industry in 2016:
Australian residential real estate markets will cool, not crash
As I write this (December 2015), house prices have fallen in most major capital cities for the first time in several years.
In fact, the CoreLogic RP Data Home Value Index for November 2015 showed that home prices fell by 1.5 per cent across Australia’s capital cities over the month, with five of the eight capital cities showing declines.
So, what does this mean?
In my opinion, and also that of the ANZ and several other financial institutions around the country (thankfully), is that housing markets in Australian capital cities will cool, not crash in 2016.
The actions of APRA and subsequently the banks have achieved the desired result by dampening prices through tighter investor lending conditions.
My Prediction for 2016: The CoreLogic RP Data Home Value Index will show an average decline of between 5% and 10% for Australia’s capital cities over 2016.
The Turnbull Government will be re-elected at the 2016 Federal Election
Whilst the Prime Ministerial ‘musical chairs’ appears to be over, the music hasn’t fully stopped for the Australian public.
The timing of the next federal election is unknown at this stage, however according to the Constitution, must be held by no later than 14 January 2017.
Pollsters are suggesting that Prime Minister Malcolm Turnbull may capitalise on his ‘honeymoon’ ratings and call an early election, potentially as early as March, however the PM has affirmed he is in no rush.
“I’m expecting it to be about this time (next year), well perhaps November is getting a bit late, I would say around September, October next year is when you should expect the next election to be,” Turnbull told reporters in November 2015.
My Prediction for 2016: I’ll take a stab and say Saturday September 25, 2016 with the Coalition comfortably elected.
Interest rates will remain stable whilst the economy shows modest growth
December’s GDP growth results came as a surprise to many analysts, with Australia’s economy showing signs of picking up momentum by registering 2.5% growth over the past year.
Despite this being the fastest economic growth in 18 months, it is still below the economy’s long–term trend of 3.5% – a sign of continued patchiness in the economy.
Subsequently, it’s hard to envision any material change in interest rates over the course of 2016.
My Prediction for 2016: The Australian economy will record GDP growth of 2.5% – 3.0% over the course of 2016 and interest rates will remain unchanged or increase by a maximum of 25 basis point increase.
Architectural excellence and innovation will define success in 2016
It goes without saying that 2015 has been a year of architectural excellence in property. As markets have accelerated, so have the expectations of a building’s occupants.
Whether it is skyscrapers inspired by ‘Beyonce’s curves’, the world’s smartest office building or a retail experience so authentic that a young Melbourne architect took out the top global gong, success is being defined by the ability to experience and inspire.
My Prediction for 2016: Architecture will expand to be branded, experiential and intelligent
New, disruptive technologies will shake up our industry
The next 12 months will feature some genuine game changers that excite and inspire me like nothing else in the industry.
I genuinely believe that our sector – largely unaffected by the disruption we have seen in the travel or media industries, for example – will experience an inflection point over the coming year.
Just think about this for a moment.
These four trends – prefabrication, crowdfunding, 3D printing and virtual reality – are all at a point of their evolution where the products are fundamentally proven but the everyday impact is yet to be felt.
2016 will be the year where the next “UBER” hits the Australian property sector.
My Prediction for 2016: One (if not more) of the four trends above will become ubiquitous and fundamentally change the way we do business.
The globalisation of real estate markets has just begun
The flow of offshore capital into Australian property markets reached historical highs in 2015, largely due to a significant increase in Chinese investment in residential real estate.
Despite the sometimes xenophobic rhetoric underpinning the national conversation, one thing is clear: the fundamentals haven’t changed and certainly won’t change for at least a generation.
We are at the start of our “Asian century” and foreign direct investment will only grow.
My Prediction for 2016: Foreign direct investment in Australian residential and commercial property will grow.
Governments start to wake to the demographic and environmental challenge
There continues to be a strange disconnect between the rhetoric of our national leaders, Federal and State Governments’ policies and the sobering demographic and environmental challenges that confront the Australian economy over the next few decades.
An ageing population and climate change sit at the center of this monumental challenge.
With a change in Prime Minister and the installment of a more moderate and pragmatic government, perhaps 2016 will be the year in which public policy catches up with the needs of the public.
My Prediction for 2016: Major policy reform platforms will be established around tax, health and the environment.