Prices in November across the country actually fell, with the CoreLogic combined capitals price index down 1.5%, and Sydney and Melbourne down 1.4% and 3.5% respectively.
Clearance rates continue to fall, selling times continue to rise and lending continues to tighten.
This could be the start of a serious correction, or it may just be another cycle in current trend of stable growth.
Either way, buyers can expect a break from the urgency and fear of missing out that we have been through.
The fear of missing out has certainly been justified
Back in July, Sydney experienced a monthly growth rate of 2.8% and the median house price had just passed a million dollars.
That translates to a weekly opportunity cost of $6,450 for a median priced house.
Put another way, it was worth bidding $28,000 more to secure a property today, rather than let a good opportunity go and wait another month.
Because some optimistic vendors have been slow to get the memo, auction clearance rate has fallen and the time each property remains on the market has increased, leaving more properties on the market each weekend.
Sydney, for example, has over 900 more properties for sale right now than this time last year.
Wider choice also means buyers can relax and compare available options more carefully.
With more choice, and more time, smart buyers are putting the focus back on thorough research.
Building and pest inspections and apartment strata investigation are well and good for understanding the bricks and mortar, but the real money is in land values, driven by the desirability of the local area.
It’s easy to be caught up in whether or not a new kitchen would constitute a worthwhile investment in a potential property and miss the story that the suburb is trying to tell you.
A strong area will weather any short term market movement and is not sensitive to needing constant renovations because demand is always increasing and supply is fixed.
Conversely, an exciting growth rally in a suburb with no intrinsic desirability cannot last.
The last suburbs to rise on the tide of a city-wide swell will be the first to undergo correction.
Choosing the right area is more than just growth rates and train lines.
The real key to understanding an area is demography
Who is in an area?
What kind of people will be attracted to it?
What shifts can we expect in the local population?
These are the questions that every buyer should now take the time to ask themselves.
Knowing the neighbours might seem superfluous for an investor, as opposed to an intending occupier, but it’s people who will be the fundamental drivers of a property’s future desirability, and therefore price.
Increasing affluence is an easy positive indicator, but upwardly mobile ethnic communities, growing families and a happily entrenched cohort of retiree owner-occupiers can all be excellent indicators also.
A closely held area with high demand from a broad base of buyers makes for a healthy investment.
The extra due-diligence afforded by a calmer market might also extend into other areas, like school catchments and NAPLAN scores, nearby zoning, impending development applications and the availability of utilities like gas and high speed internet.
These are all available from the offices, and sometimes websites, of the relevant federal, state or local government department, once you know the address, LGA, and maybe ABS SA-1 ID for each of your prospective properties.
All of this research is available pre-prepared though.
Compiled, collated, comprehensive and free for every address in Australia.
Microburbs have the tools that smart buyers need to understand Australian suburbs and the communities they’re buying into.
These are not just suburb profiles, but individual home and its microburb – the surrounding couple of blocks.
We cover all of the items on your buyer’s checklist, and throw in a few more you hadn’t even thought of yet.
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