CBA’s Bold Property Market U-Turn: 7% Growth Forecast for 2023!
Weekly Market Update with Leigh Martinuzzi MPG
Welcome to this week’s market update. In this edition, I’ll explore the latest developments in the Australian property market, shedding light on key factors that are shaping the landscape for buyers and sellers alike.
The Reserve Bank of Australia (RBA) has once again decided to keep the cash rate unchanged at 4.1% this week. This move comes in response to falling consumer spending and lower inflationary growth. The new RBA governor appears confident in the decision, signalling a commitment to maintaining stability in the financial market. In July, inflation dipped to 4.9%, down from 5.4% in June. Although housing rent increased by 7.6% in July and electricity costs rose, the RBA’s measurement of underlying inflation remained at 5.8%. This trend toward slowing inflation is a positive sign for the economy.
In a notable shift, the Commonwealth Bank of Australia (CBA) has revised its property market forecast. Initially, they projected a 6% drop in property prices for 2023, later adjusting their prediction to a 3% growth rate. However, they are now forecasting a robust 7% growth rate in 2023. The actual gains in August 2023 stand at 4.7%, further supporting the notion of sustained growth at around 5% in 2024.
It’s worth noting that at the beginning of the year, all major banks predicted declines in property values for the year, and these forecasts have since been corrected. This dynamic shift underscores the resilience of the property market in the face of changing economic conditions.
Dr. Wilson reports that the national capital city’s quarterly median house price has increased by a commendable 5.6% this year, reaching $1,063,071. Additionally, CoreLogic’s national Home Value Index (HVI) has seen a 4.9% increase, adding approximately $34,301 to property values. The driving force behind these price increases is the persistent shortage of properties for sale, combined with strong demand stemming from robust population growth. As long as supply remains limited, property prices are expected to continue their upward trajectory.
July witnessed an 8.1% decline in dwelling approvals, primarily driven by a significant 19.9% drop in multi-unit approvals. Detached dwelling approvals saw a marginal decrease of 0.1%. Shockingly, new build approvals have hit a four-year low, totalling 174,051 for the year up to July. This figure falls well below the government’s target of 240,000 approvals per annum for the next five years. This divergence between demand and supply serves as a stark reminder that the property market’s growth may be hampered by a lack of available properties.
New dwelling prices have risen by 5.9%, though this rate is slowing, as are material costs. Interestingly, the increased complexities and expenses associated with building new homes are causing many prospective homeowners to reconsider. This trend is likely to further boost demand for established homes entering the market. Coupled with improving buyer confidence, higher demand, and limited stock availability, it’s reasonable to anticipate that property prices will continue their upward trend in the coming months.
As we move forward, keep an eye on media coverage that reflects the changing narrative, especially as it relates to the bank forecasts for property price growth. Such shifts can boost confidence in both buyers and sellers, potentially leading to increased transaction activity in the property market.
Stay Informed with Our Suburb Reports
At MPG, we are committed to keeping our residents informed. We’ve recently sent out updated suburb reports, and if you missed receiving your complimentary copy, please don’t hesitate to get in touch with us. It appears that we may be in for a slightly busier spring market this year. Whether you’re looking to buy, sell, or need assistance with any property-related matters, our team is here to help. Don’t hesitate to reach out.
Thank you for joining me for this week’s market update. Stay tuned for more insights and updates on the ever-evolving Australian property market.