Sunshine Coast Property Buzz

Weekly Market Update with Leigh Martinuzzi MPG

As the Australian real estate market continues to make headlines, it’s essential to stay informed and understand the ongoing trends and developments. In this weekly market update, I explore the latest insights and provide you with a comprehensive overview of the property landscape.

Auction Success Soars

Auction clearance rates are currently impressively high, hovering above 70%. This figure underscores the enduring strength of the real estate market in Australia. Auction numbers hit their peak last week, a clear indicator of the bustling activity in the midst of the spring season. The property prices in several key markets, especially in our capital cities, are on the rise. However, in some areas, prices remain steady, with certain homes even surpassing market averages. On the Sunshine Coast, properties in the “affordable” sub-$700,000 range or those impeccably presented and positioned in the middle of the market tend to stand out. On the flip side, premium-end properties are experiencing a more extended time frame to achieve desired sales outcomes.

Interest Rates and Inflation on the Horizon

With the unexpected rebound in housing prices, concerns about inflation have surfaced. This has led to speculation about further interest rate hikes in the coming months. While it’s unlikely that the Reserve Bank of Australia (RBA) will make a move in December, to avoid affecting household spending during the festive season, January is a non-meeting month. Therefore, we might anticipate a rise in the official cash rate in November or February. However, it’s worth noting that many experts believe that interest rate changes alone won’t significantly impact inflation. Instead, factors such as increasing supply costs, including fuel, gas, and electricity, are exerting more influence on inflation. These changes are expected to continue to affect those in or near mortgage stress and new home ownership affordability. Recent statements from the Reserve Bank indicate that they don’t foresee a quick return to their target inflation range of 2-3%.

Property Prices Defy Expectations

In a surprising twist, property prices have continued their upward trajectory for eight consecutive months, despite multiple interest rate hikes and rising inflation. Combined capital cities have witnessed an impressive 8.0% increase in property values year-to-date, defying earlier pessimistic forecasts. While the pace of price growth is projected to slow down in the remaining months of the year due to the increase in new listings, low housing stock availability, and consistently high auction clearance rates continue to fuel the market’s momentum.

• Sydney: Property prices are up by a remarkable 10.7% year-to-date and 8.4% higher than the previous year.
• Melbourne: There has been a 4.2% increase year-to-date and a 2.4% rise in the last 12 months.
• Brisbane: Property prices have risen by 9.8% year-to-date and 7.1% over the past year.

In general, Australian capital city dwelling prices have risen by 0.9% in the last month and are now 6.7% higher than they were a year ago. This suggests that the window of opportunity for property investment may be narrowing as prices approach previous peak levels in the property cycle.

Rental Market Challenges

The property market’s resilience this spring is impressive, characterised by eight months of continuous price growth and four months of stable interest rates. This positive trend can be attributed to surging demand outpacing the supply. However, the rental market is facing a crisis, with extremely low vacancy rates and rising rents due to the same supply and demand imbalance.

Rental prices in Australia’s major cities have surged by 10% over the past year due to limited availability, strong overseas migration, and shifts in population between urban and regional areas. Some of the most affordable areas to rent within 20 kilometers of Brisbane’s CBD are Ipswich and Logan. These areas offer rents approximately 19% lower than the Greater Brisbane median, and Woodridge, in particular, stands out with unit rentals around 22% below the citywide median. The outer fringes of the Sunshine Coast and as a general rule, west of the highway, offer more affordable rental options.

Granny Flats as a Solution

A recent analysis of residential properties in Australia’s major cities has identified over 655,000 suitable sites for constructing granny flats, which could help alleviate the housing shortage. Sydney leads the way with around 242,000 suitable properties, followed by Melbourne with nearly 230,000 and Brisbane with almost 185,000. A significant portion of these sites is conveniently located near public transport and healthcare facilities, making them accessible for essential workers.

Granny flats offer homeowners an opportunity to provide rental housing, accommodate family members, increase property value, and generate additional rental income. This report suggests that granny flats can serve as an immediate, cost-effective solution to address housing supply issues in Australia’s major cities.

That’s my weekly wrap. Please reach out if we can assist you with any of your property needs.