Table of contents
 - featured image
Brett Warren
By Brett Warren
A A A

Australia’s home price recovery has hit a milestone

Australia’s home price recovery has hit a milestone, with national property prices now higher than a year ago according to the latest Proptrack Home Price Index

Despite the sharp reduction in borrowing capacities that accompanied the 12 interest rises home prices have reversed much of 2022’s falls according to Eleanor Creagh, Senior Economist at Proptrack,

Creagh explains that seven months of price rises have gathered traction across markets and capital city home prices have risen 3.60% this year to now sit 1.88% higher than a year ago.

Year To Date Growth
Proptrack report that home prices in Brisbane have clawed back all last year's falls to hit a fresh high and in Sydney — the market leading the recovery — prices have risen 5.14% so far this year.

Sellers this winter are benefiting from low competition from other vendors, and housing demand has outpaced the flow of new stock coming to market – one reason why prices are on the up.

Record immigration, continued shortages in rental supply, ongoing rental price growth, and tight labour markets have all likely played a part in housing demand outweighing the flow of new listings hitting the market.

This week the RBA held the cash rate steady at 4.10%, maintaining the pause on its rate hiking cycle.

Creagh explains that subsiding momentum in inflation and consumer spending has eased the pressure on the RBA to continue lifting interest rates, allowing more time to assess how conditions unfold as it tries to engineer a soft landing for the economy while returning inflation to target.

She said:

It’s very likely the cash rate is at its peak, so what could this mean for the remaining winter months and the fast-approaching spring selling season?

Talk of interest rates having peaked alongside robust auction activity is likely to buoy both buyer and seller confidence.

Clearance are rates holding firm while home prices have moved through their seventh month of growth.

Auction volumes have increased 12% compared to the same period last year at a national level, but are up 31% year-on-year in July 2023 in both Sydney and Brisbane.
image

Autcion Sales

Proptrack report that not only have prices risen this year, but sales volumes have also picked up relative to the same time a year ago.

This is especially the case in Sydney where sales volumes grew 21% year-on-year in July 2023.

Sold Listings
Although home prices and sales activity have increased, the number of properties coming to market has remained relatively subdued, said Creagh

This is typically the case in the winter months, which are usually quieter before activity starts to pick up again for the spring selling season.
image.

Preliminary Sales

However, with greater certainty around economic activity and talk of interest rates having peaked, seller confidence is likely on the up.

Proptrack suggest that with the flow of new listings having remained soft throughout the first half of 2023 and selling conditions reasonably strong, more homeowners may choose to take advantage of current market conditions, rather than waiting to sell in spring, when higher stock levels might be mean increased competition with other vendors.
image

Autcion Clearance Rates

This could see new listings volumes picking up in the coming weeks as spring approaches, with the volume of supply coming to market likely to be a defining theme for how market conditions shape up for the rest of the year.

A significant uplift in the volume of stock listed for sale would give buyers more choice and potentially more bargaining power than at present.

Creagh explains...

If the flow of new listings picks up, which is likely as we head into spring, the pace at which prices have grown this year may slow. That is, unless the peak in interest rates leads to stronger homebuying demand meeting the anticipated uplift in new stock coming to market.

Market conditions have improved following seven straight months of national home price growth. Alongside the likelihood that the cash rate has peaked, this is likely to sustain buyer confidence.

There are plenty of opposing factors that affect home price growth and interest rates are just one driver of property prices. But historically, when interest rates have peaked and are set to decline once again, it’s been a good time to buy.

Potential buyers may be comforted by the likely end of the tightening cycle, greater certainty around future borrowing costs, and continued low unemployment.

Though with inflation still elevated, rate cuts aren’t likely to be on the horizon until 2024.

If we do see the volume of listings increasing as spring approaches, that is likely to see price growth easing, unless the increased choice is offset by a lift in buyer demand.

Brett Warren
About Brett Warren Brett Warren is National Director of Metropole Properties and uses his two decades of property investment experience to advise clients how to grow, protect and pass on their wealth through strategic property advice.
No comments

Guides

Copyright © 2024 Michael Yardney’s Property Investment Update Important Information
Content Marketing by GridConcepts