Australia’s Historic Housing Shortage and Downturn Make Property Market a Tough Squeeze

Australia’s property market is facing a historic housing shortage with no new homes available in the tightest markets across the country, as reported by Sue Williams, a property news reporter for Domain. The downturn and the scarcity in the property market have made Australia’s million-dollar club more exclusive, says Kaytlin Ezzy, an economist at CoreLogic.

In her report, Williams highlights how certain areas in Australia have seen a significant drop in listings. For instance, the southern outback of West Australia, South Australia’s Barossa, Yorke or Mid North, and certain parts of Brisbane and Victoria have shown a significant dip in their housing and unit listings. This scarcity, explains Williams, is due to “a blockage in supply” as sellers are reluctant to put their properties on the market.

“Part of the reason we have such a blockage in supply is that sellers are reluctant to put their properties on the market as they can’t be sure they’ll find anything that’ll suit their needs to move into,” said Hayden Groves, the national president of the Real Estate Institute of Australia, adding that the current situation has been “a perfect storm.” 

On the other hand, Kaytlin Ezzy points out in her article for CoreLogic that Australia’s million-dollar club has become more exclusive due to the decline in property values. A year after a record number of house and unit markets were added to the million-dollar market list, many of these new entrants have now fallen below the million-dollar mark, making the club more restrictive.

Sydney recorded the largest decline in suburbs falling below the million-dollar mark, with 78 house and unit markets recording a decline in values. This is followed by declines in Victoria, Queensland, Tasmania, and South Australia.

“While declines across Sydney’s more expensive markets were some of the largest across the country, many of these markets had a relatively high starting point allowing them to retain the seven-figure price tags,” explained Ezzy.

In contrast to this, areas that had previously benefited greatly from the COVID upswing have become more sensitive to the rising cost of debt and have subsequently seen their property values fall below the million-dollar threshold.

Despite the significant downturn in the property market, both authors indicate that there’s still strong demand in the market. “We’re seeing such strong demand for good homes, even despite the interest rate rises. There’s a lot of pent-up demand,” said Brisbane agent Jacky Chu. Ezzy echoes this sentiment, stating, “Despite the decline in the number of million-dollar markets across Australia, the portion of properties selling for $1 million or more has actually held fairly steady over the year to March at almost one in four properties, suggesting high-end buyers are still active in the market”.

As Australia grapples with this historic housing shortage and downturn, it’s clear that the property market remains in a state of flux. Experts like Groves and Ezzy provide valuable insight into the market dynamics at play, giving prospective buyers and sellers a better understanding of the changing landscape.

References:

Williams, S. (2023). The tightest property markets in Australia right now have 0 new homes for sale. Domain. https://www.domain.com.au/news/the-tightest-property-markets-in-australia-right-now-have-0-new-homes-for-sale-1218987/ 

Ezzy, K. (2023). Housing downturn makes Australia’s million-dollar club more exclusive. CoreLogic. https://www.corelogic.com.au/news-research/news/2023/housing-downturn-makes-australias-million-dollar-club-more-exclusive