There's no doubt we're currently in a buyer's market.
Australia’s property market peaked in April 2022 and now we've moved to the next stage of the property cycle, the adjustment phase, and at the combined capital city level, housing values have fallen -6.5% following a 25.5% rise through the upswing.
What this ultimately means is that buyers now have more options than they did last year – particularly in our two largest states, New South Wales and Victoria.
But which areas offer would-be homebuyers the biggest increases in choice?
Well, according to PropTrack's latest data, buyers in Southside in Queensland, Suffolk Park in NSW, and Wy Yung in Victoria have seen the greatest increase in homes on the market, with listings growing by 155%, 132%, and 126% respectively.
Further, those looking to buy in Cumbalum, Shoalhaven Heads, and Gol Gol in NSW have seen their options double in the past year.
A similar trend was also observed in Winter Valley and Lucas in Victoria.
A closer look at this market shift
Historically low-interest rates fuelled strong demand from homebuyers – and record low levels of homes for sale made it extremely competitive throughout 2021.
However, markets have since shifted on the back of rapid rate rises and those hunting for a property in many areas now have much more choice.
And in some suburbs, buyers have more power.
Megan Lieu, Economic Analyst at REA Group explained:
"Since the beginning of this year, total for-sale listings have been rising in most parts of Australia.
While they're still below pre-Covid levels, it's an improvement on the extremely tight conditions seen last year.
With each subsequent cash rate rise, homeowners have been hit with higher mortgage repayments and those looking to buy have had their borrowing capacities reduced.
This has resulted in homes taking longer to sell and there being more available on the market to buy.
What this ultimately means is that buyers now have more options than they did last year – particularly in our two largest states, New South Wales and Victoria."
What's ahead?
Interestingly, 14 of the 20 suburbs where buyers have seen their choices grow the most are in regional areas.
Ms Lieu shared her insight on what can we expect ahead:
"After two years of elevated migration to the regions and homes being snapped up quickly, there now looks to be some respite for buyers.
This is evident in the 12% decrease of potential buyers per listing in regional areas from October 2021 to October 2022.
The Reserve Bank is expected to increase the cash rate further in the coming months.
We expect this to continue to rebalance the market, leading to buyers to having more choice going into the New Year."
But these are NOT the areas that investors should target.
These suburbs have all been identified as being areas where there is excess stock, but that doesn’t necessarily mean properties in these locations are automatically a strong investment prospect because you can buy a bargain.
Investment-grade locations are the key!
There are more than 10.5 million dwellings in Australia, and they’re not all created equal.
In fact, in my mind, fewer than 4% of the properties on the market at any given time are what I would call “investment grade”.
We’ve written plenty of articles over time to share what we consider an investment-grade property is (more here and here, if you’d like to explore), so I won’t go into the characteristics of a great investment, or the type of properties that fit these criteria.
Instead, I encourage you to consider:
- What are your investment goals
- Why do you want to invest in property
- And how real estate can help you reach your goals
The right investment strategy for you is personal and based on your own unique risk profile, income, expenses and goals.
Taking all of these into consideration to work out your “goal” is key because once you know what you’re aiming for, it becomes much easier to plan the steps you need to take to get there.
If you’re a beginner looking for a time-tested property investment strategy or an established investor who’s stuck or maybe you just want an objective second opinion about your situation, I suggest you allow the team at Metropole to build you a personalised, customised Strategic Property Plan.
Click here now and learn more about this service and discuss your options with us.
Source of charts and commentary: REA Insights
