Hot Local Market as Rates and Inflation Rise
Weekly Real Estate Market Update with Leigh Martinuzzi MPG
Australia’s property market moves in cycles, running through a series of booms, downturns, stabilisation, and growth. An article I recently wrote highlights a series of movements over an 18-year cycle (read here). It is clear now that we are entering the stabilisation of the market cycle. Sydney and Melbourne are leading the way with property listings on the rise, the number of sales on the decline and dwelling prices also flattening and falling in some areas. Brisbane and Adelaide, while still in good demand with prices staying firm, if not rising slightly, will soon follow. Generally, markets that have higher demand (Sydney/Melbourne) lead the way with property cycles, both into the boom and toward the bust. Slower moving markets will follow.
On the Sunshine Coast, we still have good demand for properties, and yes, while we have felt the slowing of the market here, we are not in the same position as Sydney and Melbourne, yet. Here are some stats from our previous weekend of open homes. We had four open homes, with three that just hit the market that week. The first home had two buyer groups after three weeks of being on the market, no offers were received on this one that weekend. At the next open we saw ten buyer groups coming through to inspect. which is relatively high for Palmwoods. This home had multiple offers received and sold on Sunday at a price above the vendor’s expectations.
We then ran an open house at a gorgeous Queenslander in Palmwoods. This property received high interest via our online advertisements and social media promotions. On the day, we welcomed 29 groups to our open house. Multiple offers have been received and we expect a decision will be made by the end of the week to sell, once negotiations are complete. And finally, the last home welcomed 16 groups. Multiple offers were received, and this home is now under offer for a price well above the owner’s expectations. We are still experiencing a buoyant market locally. For those A-grade homes that present well, we can expect to receive high interest in the current market. Those properties that require a little more work may have to hold out longer to attract the right buyer and/or be a little more flexible with price expectations.
The ABS has valued the Australian property market at over $9.9 Trillion with approximately 10.8 million dwellings. The equity held by property owners grew by $2 Trillion in just one year. This has helped fuel the growth that we’ve experienced over 2020 and 2021. However, now the government needs to tackle rising inflation, which I’m told is sitting around 6% and still rising fast. To do so, they’ve just raised the cash rate to 0.85%. On top of the interest rate rises, we’ve also seen a rise in the cost of fuel, energy and food and many other essential living items. This will dampen household savings as families put more of their income towards their mortgages and living. And so, we enter a stabilising property market which I expect will run for the next few years and could even mean a decline in property prices in some areas by 10%.
With worsening housing affordability and rising costs, those looking to buy will find it harder to save a deposit for a house. For most people, this will mean their borrowing capacity will worsen, and, those who have a current mortgage can expect their monthly repayments to increase. For an average loan of $500,000, you can expect to be paying an additional $200 on your mortgage. We will continue to see a slowing market here locally towards the end of the year and into the new year, yet it’s not so clear if we will see a major decline. Low unemployment, lots of infrastructure improvements and a high-demand location make me think the Sunshine Coast may be able to hold steady moving forward.
AUCTION CLEARANCE RATES (PRELIMINARY). WEEK ENDING 12TH OF JUNE 2022
- Queensland – 68% (103/1224)
- NSW – 80% (271/1425)
- Victoria – 74% (251/1224)
- ACT – 77% (39/69)
- South Australia – 79% (68/322)
- Tasmania – N/A (0/144)
- Western Australia – 67% (3/702)
- Northern Territory – N/A (0/39)
REVIEW(S) OF THE WEEK
Great working with leigh
“Leigh was a very hands-on real estate agent throughout the whole process, any questions or concerns we had Leigh would help with. Couldn’t recommend anyone better to have as a real estate agent.” – Woombye Buyer
“Leigh made what is such a huge investment, an easy, hassle-free process. His communication was quick and effective and even after our contract went unconditional, he still took the time to check all was going ok and whether we required any further information. No sign and forget here. Thanks, Leigh!”– Woombye Buyer