Consumer Confidence Wobbles, But Sunshine Coast Market Stays Resilient
Weekly Real Estate Market Update with Leigh Martinuzzi MPG
Recent data from the ANZ-Roy Morgan survey reveals a mixed picture for the Australian economy and consumer confidence, which has dipped slightly by 0.8 points to 82.3, remaining below the critical 85-point benchmark. While this may seem concerning, the data also shows a slight improvement compared to this time last year. However, consumer sentiment has dipped across most states, with Queensland as an exception. Overall, more Australians are feeling pessimistic about the economy’s short- and long-term prospects, suggesting a more cautious approach to spending, especially on significant household items, in the months ahead.
An article I read this week highlighted the growing concerns about how the Reserve Bank of Australia’s (RBA) higher interest rates are impacting the economy. The argument is that simply raising the cash rate disproportionately affects lower-income earners, creating a ripple effect that collapses consumer spending. The idea is that we should explore more balanced strategies to tackle inflation rather than overburden households already struggling with rising living costs. This is backed up by the latest GDP data, which shows that the Australian economy grew at its slowest rate since the 1990s for the June quarter this year. Despite this, the RBA’s Governor, Michele Bullock, has made it clear that if inflation persists, it’s highly unlikely that interest rates will be reduced anytime soon. She even suggested that around 5% of owner-occupiers on variable-rate loans might have to sell their homes to ease financial burdens. Given these economic headwinds, most households are expected to tighten their belts rather than sell up, especially as the rental market offers no relief.
Adding to the sentiment of cautious consumer behaviour is last week’s national auction clearance rate, which dropped to 58.8%, down from 67.7% the previous week. While auction listings have risen slightly, the dip in clearance rates may indicate a cooling in buyer demand and sentiment, although it could be too early to draw definitive conclusions. On the Sunshine Coast, I still anticipate a busy spring market, with more sellers coming online and buyer demand staying strong. Price and presentation will be key in achieving strong results quickly, and buyers will likely have more options. However, I don’t believe this will lead to a drop in prices here on the Coast; instead, buyers may approach with more caution to avoid overspending.
Matusik’s recent report sheds light on the ongoing undersupply of new housing in Australia, marking the worst shortage we’ve seen in 30 years. He points out that the cost of building a new average four-bedroom home in the suburbs has now reached about $550,000. Despite this, the demand for housing remains robust, particularly from second-time purchasers who may not have a mortgage and don’t need one to sell and repurchase. This phenomenon could explain why property prices continue to rise, despite the RBA’s 13 rate hikes in just 18 months. In contrast, first-home buyers, who now make up only 23% of new home purchases, face steeper barriers to entry. This situation likely means that many buyers—both first-time and second-time—will pivot toward established homes, where the cost-value benefits are more attractive than building new.
Given all these insights, my view is that property prices are likely to continue their upward trend, albeit at a more measured pace. Rising mortgage costs and overall living expenses are putting a strain on buyers’ willingness and ability to pay higher prices. However, transactions involving interstate and non-local buyers who find the Sunshine Coast market more affordable may still drive price growth. Sellers looking to attract these buyers will need to ensure their properties stand out in terms of presentation and leverage effective marketing strategies, such as using digital media and video content, to capture the attention of the best buyers.
The market ahead looks promising but nuanced, requiring careful navigation for both buyers and sellers. If you have any questions or need personalised advice, please feel free to reach out. At Martinuzzi Property Group, we’re here to help you live more fully, have more meaning, and find more joy on your next property journey.
