Will Property Prices Crash??? Market Update with Leigh Martinuzzi MPG

Will Property Prices Crash???

 

Weekly Real Estate Market Update with Leigh Martinuzzi MPG

 

There is a lot of talk at the moment about the impacts that an increase in Australia’s cash rate will have on property prices. Articles that are driven by fear suggesting that there will be 14 rate hikes over the next 12 months. One article suggests that for each 1% rise we will see property prices fall by 20%. “So, we are talking in the realms of halving.” I imagine this would not only destroy the property markets, but it would have a fairly significant impact on Australia’s economy. Personally, I cannot see this happening and here is why.

 

I do believe that we will see many interest rate rises over the next 18 months and naturally, this will weigh heavily on the number of buyers who can afford to purchase a property. With housing affordability constraints and costs of living on the rise, many will have to choose to rent over buying. The amount required for a deposit has risen sharply over the past 2 years. The average house deposit of 20% has risen by $36,000 and $15,000 for a unit. For many first home buyers, it will be harder to save to purchase a home however, I expect government incentives will be released to help these buyers.

 

Buyer demand will soften, and we’ve already seen that in Melbourne and Sydney with property price growth now falling. Nationally prices have risen in the first quarter of 2022 by 2.8%, however, QLD and SA can be thanked for this as prices there remain strong. Although buyer demand will dampen, I cannot see a good enough reason for a sharp market crash. A shift in interest rates by 2% may cause some living constraints, particularly with those who have just entered the market and perhaps over capitalised on an existing purchase, however, you may find luxury items are the first things to be discarded rather than the forced need to sell your house.

 

We know that since the start of the pandemic household savings have skyrocketed. Many households have saved enough to absorb, at least for the short-term, the possible rate hikes. On top of that, employment conditions remain strong with the unemployment rate currently sitting at 4% with the expectation it will lower to 3.3% by the end of the year. This will most likely push wages higher and therefore make it possible for many to afford higher mortgage repayments.

 

My final thoughts are on population change. Did you know that in 2021 Australia’s population grew by around 45,000 residents? The 20-year average is 322,000, which was reduced in 2021 significantly due to COVID travel restrictions. There has been much talk about interstate migration with some areas having higher than average spikes in population yet in many ways the lack of international migration must have a fairly large impact on housing demand. We expect with COVID restrictions coming to an end Australia’s international immigration is about to ramp up which will bring more buyers to the market.

 

In Queensland, interstate migration saw our population grow by 58,000. Of that, the Gold Coast claimed 35% of all new residents while the Sunshine Coast gained 30%. I feel this is a good sign that prices will remain steady over the next few years even with rate rises. The difference will simply be those who wish to sell, may see a fall in buyer number and the quick succession of offers that come in which will mean time frames to sell will be pushed out. Many ask me if I think the market is going to crash. It is very possible yet right now from where I am standing, it wants crash like some of these forecasts to predict. Selling conditions just may not be as favourable as they’ve been in the last 12 to 24 months.

 

Grab a copy of the March Quarterly Newsletter here. 

 

Auction Clearance Rates (Preliminary). Week Ending 24th of April

  • Queensland – 67% (112/1202)
  • NSW – 81% (395/1256)
  • Victoria – 79% (448/1107)
  • ACT – 85% (39/54)
  • South Australia – 89% (80/306)
  • Tasmania – 100% (1/106)
  • Western Australia – N/A (1/680)
  • Northern Territory – 100% (2/26)

*(Auctions/Private Sales)

 

REVIEW(s) OF THE WEEK 

 

Found our forever home through Leigh!

“Great experience dealing with Leigh. Thanks to him inviting us to a VIP inspection, we were the first ones to snap up our new home. If we were to ever sell, we would definitely use him as our agent. Highly recommend.” – Buyer 

 

5 Taronga St Palmwoods

“Kez was who we dealt with, she was very helpful, great communication and highly professional. Thank you for a great experience in purchasing our new home.” – Buyer 

 

CALL US For an obligation free Chat