Australian Property Market: Rising Prices, Supply Shortages, and the Impact of Interest Rate Rises
Weekly Real Estate Market Update with Leigh Martinuzzi MPG
The Australian property market continues to experience notable developments, including surprise rate rises, rising property prices, and persistent supply shortages. In this blog post, we will explore the recent trends in property prices across Australia, particularly in Brisbane and Sydney. Additionally, we will examine the impact of interest rate increases on mortgage holders and discuss the future outlook for the market.
The Reserve Bank of Australia (RBA) recently announced a surprise rate rise of 0.25%, bringing the cash rate to 4.1%. While this decision aims to manage inflationary pressures, its impact on the property market remains to be seen. While it’s knocking our first-home buyers and impacting the disposable income of mortgage holders, we are seeing the property price index continue to rise and rental fees increase as demand for rentals rises.
Although the rate of increase has slowed down slightly, property prices in Australia continue to rise. In Brisbane, prices increased by 0.2% over the last week and 1.3% over the last month. However, over the past 12 months, Brisbane has experienced a decline of -8.8% in property prices. Nationally, prices saw a 1.2% increase in May, while Sydney posted a remarkable 1.8% lift, reaching the city’s highest monthly gain since September 2021.
Despite recent fluctuations, overall property prices in Australia remain above pre-COVID levels. This indicates the continued strength of the market, despite the challenges posed by the pandemic and recent interest rate rises.
The Australian property market continues to face supply shortages, which have contributed to the rising prices. Auction clearance rates, which reached a preliminary clearance rate of 77.2% (the highest since October 2021), are an indication of improving buyer confidence. However, seller confidence remains relatively low, leading to a scarcity of available properties. Open home attendance numbers are above decade averages, highlighting the ongoing supply-demand imbalance.
Examining specific suburbs, Palmwoods has a median house price of $857,000. Over the past month, there were 41 properties available for sale, with an average time on the market of 39 days. Notably, there is a high level of interest from 2,170 potential buyers. The median rental price stands at $700 per week, offering a rental yield of 4.4%. Similarly, Dulong through to Buderim and surrounding suburbs also showcase varying property prices, availability, and rental yields. If you’d like our complementary suburb report for your area please get in touch.
The consecutive interest rate rises have resulted in higher mortgage repayments for borrowers. For instance, a mortgage holder with $750,000 debt has seen monthly repayments increase by $2,000. This could particularly impact low to middle-income earners and first-home buyers in the coming months. However, there is speculation that interest rates may decrease before the end of 2023, potentially providing some relief.
Despite interest rate rises, the Australian property market is expected to see further price gains due to population growth and ongoing supply shortages. Some experts predict price increases of 3% to 5% per year could be expected over the next couple of years. They also suggest that we may see rental prices climb a further 5% to 10%. However, the impact of interest rates on affordability will remain a key consideration for buyers and homeowners.
The Australian property market continues to demonstrate its resilience with rising prices, supply shortages, and the effects of interest rate rises. While Brisbane and Sydney have experienced mixed trends in property prices, the overall market remains above pre-COVID levels. Buyer confidence is gradually improving, but the scarcity of available properties is a significant factor contributing to rising prices. As interest rates fluctuate, potential homebuyers and mortgage holders should stay informed and assess their financial situations carefully.
AUCTION CLEARANCE RATES
- Queensland – 49% (257/1168)
- NSW – 68% (894/1583)
- Victoria – 71% (777/1166)
- ACT – 70% (79/74)
- South Australia – 75% (103/336)
- Tasmania – NA (0/149)
- Western Australia – 33% (9/721)
- Northern Territory – 67% (3/20)
*(Auctions/Private Sales)
REVIEW(S) OF THE WEEK
Outstanding
We have just purchased a property from Leigh and he has been absolutely amazing from first inspection to settling. Leigh prides himself on his diligence and his communication throughout the process making it stress-free. – Buyer
