Australian Property Market Recovers, Experts Dismiss Fears of Housing Crash - Property Inc

Australian Property Market Recovers, Experts Dismiss Fears of Housing Crash

Recent data and expert opinions suggest that the Australian property market is showing signs of recovery and a housing market crash is unlikely. The latest data collected by SQM Research for April 2023 revealed a decrease in national listings by 9% compared to March, while new listings fell by 20.2% [1]. SQM Research’s Managing Director, Louis Christopher, said that the falls in new listings, combined with an uncharacteristic fall in older listings, suggest vendor caution selling at this time [1].

CoreLogic’s Home Value Index recorded a rise of 0.6% across all capital cities in March and a lift of 0.5% in April—the first such rises in 11 months [2]. Tim Lawless, Director of Research at CoreLogic, attributes the recovery to net migration and a shortage of stock. He said, “Many prospective vendors have stayed on the sidelines through the downturn, keeping inventory at below average levels and providing sellers with some leverage at the negotiation table” [2].

Eliza Owen, Head of Research, Australia, at CoreLogic, says that while Australian properties are more affordable now than during the pandemic, they are still expensive [2]. She explains that the boom was largely fueled by emergency low interest rates during the Covid-19 pandemic, which slashed the cost of borrowing, and the strong recovery that followed, with high demand, low unemployment, and high levels of accumulated savings [2].

Maree Kilroy, Senior Economist at BIS Oxford Economics, states that while there is no doubt the property market was in a downturn over the latter half of 2022, a crash is unlikely due to strong economic fundamentals [2]. Kilroy says that rising interest rates were the key factor underpinning the property market downturn last year, but with the cost of debt being the best guide for the housing market outlook, property prices are likely to increase once interest rates start to fall [2].

Owen highlights that the magnitude of the declines in the housing market started to moderate last year, and recent rises in CoreLogic’s dwelling values in March and April indicate that the market may have reached the bottom of the falls [2]. Experts predict that the Australian property market will continue to recover, with Kilroy expecting a nationwide dwelling peak-to-trough price fall of 11.5%, with the trough to be met in the second half of 2023 [2].

References:

[1] Sam Murden, “Crucial reason home prices won’t crash,” https://www.realestate.com.au/news/sydneys-market-continues-to-tighten-as-new-listings-drop-by-23-per-cent/ 

[2] Michelle Bowes, “Is The Australian Property Market Going To Crash?” https://www.forbes.com/advisor/au/property/will-the-australian-property-market-crash/ 

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