The latest twist in the tale of national property prices: explained
The property market has had more plot twists than a daytime soap opera in recent years. So getting the skinny on current trends is helpful when you’re planning to buy. Here’s the lowdown on the latest surprising bit of data.
Despite all the media doom and gloom predicting that the Australian housing market would tank in 2023, national property prices actually rose ever-so-slightly in February.
So what the heck is going on?
Property price trends
You may have heard it’s been a bit of a buyer’s market in recent times. Over the past 12 months, property prices were down 7.2%, the biggest annual drop since May 2019.
With rising interest rates, buyer demand slowed. This saw properties sitting on the market for longer.
And to entice sales, vendor discounting rose to -4.3% in January 2023 from -2.9% in November 2021.
However, recent data shows things may be starting to turn.
A PropTrack analysis shows that Australian property prices actually rose by 0.18% in February 2023.
And here’s why …
Impact of housing supply
If you’ve been house hunting recently you may have noticed it is slim pickings. In fact, as of December 2022, new listings were 20.4% lower year-on-year.
Lower listing volumes for most states has created increased buyer competition, which has helped drive prices up slightly.
Now, this may just be a blip – listing volumes can experience seasonal fluctuations and if supply increases again prices may drop back down.
But it just goes to show how hard the market is to predict. And those who are holding out on buying until the market drops further might want to start preparing their finances sooner rather than later.
Impact of interest rates
Why were national property prices expected to drop in 2023? And why might they still fall?
Well, successive rate rises have seen the RBA’s official cash rate hit 3.35%, up from 0.10% in May 2022.
And in a recent statement, RBA governor, Philip Lowe announced the Board expects more rate hikes for 2023.
As interest rates rise, so too do mortgage repayments, which means buyers are unable to borrow as much – leading to downward pressure on property prices.
But as we’ve seen in February, other factors – such as the number of homes available to buy – can counteract that downward pressure.
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buying a home can feel like a full-time job in itself!
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