by Jade Harrison It’s been a tough journey for the local property market, but have we hit the bottom yet? And what can we expect in the months ahead? MPP asks the experts.

So, when it comes to this stagnant market,  is the worst behind us, and what can we expect moving forward? Spring is predominantly one  of the most active seasons for the local property industry, with an influx of listings and heightened inquiry. But with unprecedented economic turbulence, this year has been a challenging one to predict, and forecasting the property market has left even the most esteemed experts scratching their heads.

In his latest Matusik Missive Report, renowned property analyst Michael Matusik puts some perspective on the most recent property data, saying that although there’s been  a dip in prices over the month nationwide, it equates to very minimal changes in the market.

“The best measure of the data on residential prices, RPData-Rismark  Hedonic Index, shows  that Australian house prices fell just 0.2 per  cent last month. This equates to an actual drop  of $1200 against a median dwelling value of about $525,000.

“This effectively means no change, which is amazing really given the low level of confidence, the high level of advertised stock for resale and the persistent warnings of a real estate Black Friday,” he says.

“The year-on-year result is a fall of just two per cent or $10,600. Even Brisbane, with the impact of the recent flood weighing down its property market, has fallen just 2.6 per cent, or by $11,600, since January. The Australian share market can fall more than this in a single day.”

Michael is quick to shun the negative tabloids that have haunted the property market of late and he refers to the latest figures from national valuation firm Herron Todd White (HTW), which reported a bearish August post which “as one would expect, received lots of airplay via a range of economic websites whose authors are proud of their track record of forecasting around  10 of the last two recessions”.

He says the majority of property owners are still making gains, just not quite as big. “Now HTW’s work is correct, in that it is a buyer’s market and sellers need to meet the market  in order to make sales, and yes, most markets in South-East Queensland have seen a five to 10 per cent fall in prices over the past six to 12 months. But that doesn’t mean sellers have made a loss; it just means they may have had to accept less for their  property than they would have achieved  a year or so ago.”

It can be tough trying to pick the bottom of the market, but my thoughts are, we are fairly close to the bottom of the market now

Leading research analyst from RP Data, Cameron Kusher, says property owners have been a little spoilt in the past. He says the last decade or so was unusually prosperous for property owners who experienced unprecedented and heightened capital growth. “Prices go up, prices  go down,” Cameron says. “Over the past 15 years we’ve become very accustomed to prices going  up and now we’re at a place where prices aren’t continually going up and people have forgotten that that happens from time to time. It’s been too good for too long and people have forgotten that property prices don’t forever go up.”

So, if the statistical property data indicates  such mild declines in recent property growth, is  a large proportion of the current negative stigma attached to property merely psychological?

Julie Ryan advises the Federal Government  on real estate matters and is a leader in real estate marketing. She says emotions play an integral role on influencing markets. She refers to the cycle of market emotions (see illustration below) and says at the moment we’re close to the lowest point on the graph. “Predicting the exact point on this cycle of market emotions is an imprecise science, but it is clear that we are at the very low point emotionally, probably somewhere between despondency and depression, but that means depression as an emotion, not an economic one,” she confirms.

“This makes it very easy for both buyers and sellers to feel somewhat hopeless, but the reality is now is the ‘point of maximum financial return’, and this should be giving buyers a much bigger reason to act than many are willing to.”

Julie says people need to realise that now is the time to be looking forward to better times. “Isn’t it strange that we are so affected by market mood that most of us wait until there is clear evidence of an upturn to make a buying decision when the facts are, the ideal time to buy is now.”

With emotions aside, most experts agree the Coast is experiencing a buyer’s market, with an oversupply of stock. However, Cameron has an interesting theory that would suggest the end of the oversupply of property for sale on the Coast is nigh. He says a lot of this oversupply can be attributed to a large proportion of vendors who needed to offload investment properties or who’d simply overcommitted. According to him, most  of these sellers have sold their properties and  are now exiting the market.

“I think the main reason why we’ve been seeing falls [in property prices] on the Sunshine Coast is from a lack of demand, so we’ve seen the baby boomers really drive it up and people have to sell, where those who’ve overcapitalised had  to sell their holiday homes etcetera,” he says. “I would think most of that has come to pass. I think we’ve seen most of those clear out of the market. Certainly if we got another interest rate hike we may see a few more having to sell but you’d think – given this downturn has been happening on the Sunshine Coast since early 2008 – that most of that is behind us, particularly in the general market, maybe not in the premium market,  but certainly in the general market.”

While it’s safe to assume most of the  property doom and gloom is behind us, it is  still quite challenging to perfectly time the absolute bottom of the market. Hard data  such as statistics released by RP Data and the Australian Bureau of Statistics indicate market trends and form the foundation for credible nationwide market analysis, but this data always has a lapse period (where the data is being collated) of around three months. It’s been said  in the past that for this particular reason, the bottom of the market can be hard to identify, until of course it has passed.

“You never really know when the bottom  of the market is, until it’s already been,” says Cameron. “It can be tough trying to pick the bottom of the market, but my thoughts are we are fairly close to the bottom of the market now but I don’t think that means prices are going to necessarily start climbing right away.”

Even the Brisbane property market  has fallen just 2.6 per cent since January. The share market can fall more than this in a single day.

While the old adage ‘it’s about time in the market, not timing the market’ is true, it doesn’t mean the majority of buyers don’t want to capitalise on a bottomed-out market. As Julie says, “Buyers often wait to be sure they have bought at the lowest possible point in the market, and while on the surface this seems logical, the reality is quite different,” she says. “No one can be certain that the market has bottomed out until it is on a definite upswing, and by then they will have missed the precise opportunity they were looking for.”