The Australian Property Market: A Multispeed Mystery with Increasing Signs of Activity

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The Australian property market has seemingly thrown investors into a maze of contradictions. Despite reports of increased home sales at lower prices and a concurrent surge in mortgage arrears, housing price indexes continue to rebound, pointing to an intriguing multispeed property market. However, industry experts are starting to observe signs of increased market activity, adding a new layer to the property puzzle.

In her insightful article, property reporter, Miriam Sandkuhler outlines the current complexities of Australia’s property market. Sandkuhler highlights, “Across Australia, the market is producing very different results depending on location. On one side are buyers in a strong financial position thanks to the property rises of recent years… On the other side are typically younger buyers seeing rising rates crimping the amount they can borrow.”

Complementing Sandkuhler’s analysis, REA Group Economist Anne Flaherty recently announced a steady increase in market activity. Speaking to Sky News Business Editor Ross Greenwood, Flaherty revealed, “We did see listings largely steady between May and June, but over the coming couple of weeks we’re actually going to see nearly 2,000 auctions across Australia.”

Flaherty also noted an unusual persistence in market activity, stating, “Winter is typically the quietest time of year but actually we haven’t seen that much of a drop compared to the Easter period and the winter period this year.”

What factors underpin this multispeed market, though? According to Sandkuhler, location has become paramount. Areas experiencing the most substantial benefits are defined by the ’20-minute city’ phrase. These are neighbourhoods where residents can live, play, and work within short commute times, usually found in long-established residential suburbs.

The demand for these highly desirable inner and middle ring suburbs, coupled with a scarcity of listings, is pushing property prices higher. This dynamic is the engine driving the current rebound. Sandkuhler explained, “It’s these high amenity, tightly held and development adverse inner and middle ring suburbs that are driving the current rebound.” 

Despite this, a significant portion of the market, specifically outer suburban and some regional areas, remains sluggish, with values at least 10 per cent below their peak. The advent of rising mortgage rates and the end of low fixed-rate mortgages for approximately 850,000 homeowners are predicted to further hamper these areas.

This doesn’t mean the future of the Australian property market is doom and gloom. Market dynamics are complex, and incoming migration may offset some negative factors by increasing demand for housing. Flaherty’s observation of heightened activity could also indicate market resilience or adaptation.

However, understanding this multispeed market is crucial for current and future investors. Sandkuhler advises, “The first thing to do is to take this multispeed market seriously, as it could be a good indicator of where we’ll be in the next two years. The second thing to do is get some professional advice before going ahead… this is not the time to be buying ‘based on my gut feeling.'”

The complexities and emerging trends of the Australian property market underscore the need for meticulous planning, in-depth research, and professional guidance to make informed investment decisions.

References:

Sandkuhler, M. (2023). Australia’s multi-speed property market testing investors. https://www.apimagazine.com.au/news/article/australias-multi-speed-property-market-testing-investors 

Sky News. (2023). ‘Signs’ of activity in property market ‘picking up’. https://www.skynews.com.au/business/real-estate/signs-of-activity-in-property-market-picking-up/video/151f4d66c297c2e966400c9cacfbe200