Australia’s Housing Market on the Rise as Supply Shortages Linger - Property Inc

Australia’s Housing Market on the Rise as Supply Shortages Linger

Australia’s housing market continues to witness a surge in property prices amidst a persistent shortage in the property market. As per recent reports, the property prices have seen a consistent uptick for six months straight, reflecting a robust recovery trend in the market.

According to a report by Kate Ainsworth, the CoreLogic’s national Home Value Index recorded a 0.8% increase in property prices in August, taking the total increase since February to 4.9% or $34,3011. This growth rate surpasses July’s 0.7% increase, albeit still below the 1.1% and 1.2% rises seen in June and May respectively.

Tim Lawless, CoreLogic’s research director, highlighted the role of major cities in this resurgence. “Sydney has led the recovery trend to date, with a gain of 8.8% since values found a floor in January this year,” said Lawless. Brisbane, too, showcased a strong comeback with a 6.2% increase since February.

This sentiment is echoed by Bloomberg, which noted that Australia’s housing market momentum gathered pace in August as rising demand from the expanding population absorbed the new supply2. The report further emphasized the 1.1% rise in Sydney prices and Brisbane’s commendable 1.5% increase in August.

Interestingly, while most cities experienced growth, Hobart remained an exception. As per Mr. Lawless, Hobart’s property value was relatively “flat” in August1. He added, “Hobart home values [are] unchanged since stabilizing in April, while values across the ACT have risen only mildly, up 1.0% since a trough in April”.

One of the primary factors propelling the price hike is the scarcity of advertised homes for sale. Reports suggest that the advertised supply is a significant 15.5% lower than the same period last year.

Despite this persistent shortage, the market did witness an “unusual” number of vendors during the winter, which is traditionally a quieter period for property transactions. The forecast for the coming months remains optimistic. “Spring and early summer have historically been more active months for property listings and if the winter months are anything to go by, the spring selling season is likely to be more active than last year,” the report added.

However, the challenges of the housing market extend beyond supply issues. CoreLogic’s report highlights the impending risks of increased mortgage stress with interest rates expected not to fall until “well into 2024”. While mortgage arrears are currently marginally above record lows, a rise in borrowers falling behind on repayments is anticipated for the remainder of the year and into 2024.

Yet, the silver lining remains. The rapid drop in inflation rates, coupled with growing expectations that interest rates have peaked, is poised to uplift consumer sentiment. This is anticipated to bolster high commitment decisions, such as property purchases, further invigorating the market.

To sum it up, Australia’s housing market is on an upward trajectory, fuelled by the supply-demand imbalance. As the country gears up for a potentially buzzing spring season, all eyes will be on how the market dynamics play out in the face of looming challenges.

References:

Ainsworth, K. “House price recovery picks up speed with sixth straight monthly increase, as property shortage continues to squeeze market.” ↩ https://www.abc.net.au/news/2023-09-01/housing-market-recovery-house-prices-rent-corelogic-proptrack/102799598

Bloomberg. “Australia Property Prices Accelerate as Supply Shortfall Bites.” ↩ https://www.bloomberg.com/news/articles/2023-08-31/australia-s-property-prices-accelerate-as-supply-shortfall-bites#xj4y7vzkg

Recommend0 recommendationsPublished in Property News

Related Articles

Responses