Australian House Prices Set to Rise Further
Weekly Real Estate Market Update with Leigh Martinuzzi MPG
There is a definite sign of lowering demand in the property market right now. My feeling is that this period of uncertainty won’t last long. Using historic property charts and trends, there and several economic and housing experts that are suggesting that property prices in Australia will continue to rise. This could make entry even harder for those buyers looking to purchase in the future. It is likely we will experience 6 to 18 months of correction before we see dwelling prices continue to climb, albeit probably not at the rapid pace of growth that we saw in 2021. Australia’s prices grew at the fastest rate on record rising a record 23.7% over that year.
Buyers are hesitant to purchase right now, with an expectation that dwelling prices will decline further. There is a lack of urgency, and most people are happy to wait. With headlines suggesting drops of 30% or more, it’s easy to understand why you’d choose to wait. However, just as the boom seemed to end almost overnight, the market, when ready, will kick back into gear just as quickly. Timing the market is a very hard thing to do. Well-presented homes that are priced right are receiving good offers in a quick timeframe. Those homes that don’t represent great value to buyers are being overlooked and taking longer to sell.
RBA Governor Lowe this week communicated that the cash rate will be raised further in the coming months. They expect that inflation will climb and peak at 8% next year before dropping back to 4% by the end of the year. Their goal is to try to maintain inflation around 2-3%. This means that interest rates will rise accordingly. Currently, most major banks are offering fixed and variable mortgages from anywhere between 4.5% and 5.5% of the back of the current cash rate at 2.35%. Governor Lowe has suggested the cash rate may rise to 3.95% by mid-2023. That being the case, we could see mortgage rates hover around 7-8%. Historically, that isn’t the worse we’ve experienced, however being that property prices remain high, the ability to sustain mortgage repayment becomes harder. That being the case, Mr Lowe suggested prices may fall by 10% during this correctional period however, that’s still in increase over the past 3 years by about 20%.
Here on the Sunshine Coast buyer confidence is much like the rest of Australia, not great. Locally, in Palmwoods, Woombye, Eudlo, and the surrounding suburbs, we are seeing the number of listings coming to the market still low, and although demand has declined, one would think there’d still be enough on offer to satisfy the current demand. Just as there are many buyers sitting on the fence, there are many sellers also holding off, waiting to see what happens. We are seeing many offers on properties coming in that are conditional upon another sale. This makes it very tricky for both buyers and sellers in this situation. On one hand, until you receive a confident offer on your house, it’s hard to know how much you can offer on the other house. And for this reason, buyers are making more reserved initial offers. This is creating a bit of a stalemate amongst buyers and sellers in these situations.
Auction results in the southern states improved slightly last week, a sign that more activity is on the cards as we move through spring. This will naturally bring more buyers to the market, and for us on the Sunshine Coast, I think we will see demand from these southern state buyers improve. International migration is expected to increase, which will also create more demand for housing in Australia. If the number of homes for sale remains low, it’s probable that dwelling prices in Australia will begin to rise again.
AUCTION CLEARANCE RATES – WEEK ENDING 21ST OF AUGUST 2022
- Queensland – 40% (245/1240)
- NSW – 51% (950/1402)
- Victoria – 61% (1032/1222)
- ACT – 58% (105/80)
- South Australia – 73% (116/321)
- Tasmania – 100% (1/141)
- Western Australia – 14% (14/658)
- Northern Territory – 50% (2/34)
REVIEW OF THE WEEK
Great Job Leigh
Leigh has great real estate knowledge of the Palmwoods and surrounding area and sold our house quickly and for a good price. He kept us up to date with the whole process. Great job Leigh. – Palmwoods Seller