Australian Property Market: A Turning Point or Transitional Phase? - Property Inc

Australian Property Market: A Turning Point or Transitional Phase?

Australia’s real estate market, long known for its oscillating dynamics, may be at a crossroads, as an unusual recovery unfolds despite multiple recent interest rate hikes. Reports from Thierry Ng and Ellen Lutton offer some insights into the current situation and what might lie ahead.

According to a new listing data report by Ray White Data Analyst, William Clark, vendor listings across the country have been underperforming due to multiple interest rate hikes by the Reserve Bank of Australia (RBA). The bank’s decision to raise the interest rates for the 11th time in 12 months to 3.85% has led to a significant slump in listings, with the situation seeming bleak in cities like Sydney, Canberra and Melbourne. However, a recent dip in older listings may signal a positive shift.

On the other hand, Ellen Lutton’s article on property prices posits that the downturn in the property market may already be officially over, with prices starting to rise again. This recovery is being led by Sydney, where the median house price has risen by 1.3% over the March quarter. This small but significant increase, coupled with a resurgence in net migration, could be heralding a broader shift in the market.

However, a closer look at these phenomena reveals a complex web of factors at play. A significant contributor to the price rises is the severe shortage of property for sale. As William Clark pointed out, “A market with fewer old listings demonstrates more compatibility between listings and prospective buyers”, a sentiment echoed by Ellen Lutton: “there’s anywhere from 10 to 20 per cent fewer homes for sale right now, on Domain’s data”.

Moreover, the resurgence in net migration could mean the uplift in prices remains entrenched in the near term. Gareth Aird, head of Australian economics at CBA, highlights that we are currently facing a “big imbalance” between underlying demand and supply.

However, Westpac senior economist Matthew Hassan warns that the market is in a holding pattern and that the recovery is unusual as it moves ahead despite interest rate headwinds. He states, “This style of price-led upturn is uncanny. It’s unusual. It doesn’t mean it won’t be sustained but what I would say is it’s harder to sustain”.

Both articles underscore the unpredictability of the current property market dynamics. While there are indications of a possible market recovery, many experts urge caution and a focus on the bigger picture. According to Dr Nicola Powell, Domain’s chief of research and economics, “property should be considered as a longer-term investment. If we do this, timing the market becomes less important”.

Whether the Australian property market is at a turning point or merely in a transitional phase remains to be seen, but one thing is for sure: it’s anything but dull.

References:

Thierry Ng, “Australian property market listings fall, but fewer old listings could be a positive sign,” https://thepropertytribune.com.au/market-insights/australian-property-market-listings-fall-but-fewer-old-listings-could-be-a-positive-sign/ 

Ellen Lutton, “Property prices are rising again. Are we at the bottom of the market or the beginning of another boom?” https://www.domain.com.au/news/the-difference-between-the-bottom-of-the-market-and-the-beginning-of-another-boom-and-where-australia-is-at-1215559/ 

Recommend0 recommendationsPublished in Property News

Related Articles

Responses