Stabilizing Property Market and Escalating Rental Pressures: Insights from Analysts and Homeowners
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The Australian property market is displaying signs of stabilization following its recent boom, yet the rental market continues to tighten, particularly in the apartment sector. According to Emilia Terzon’s article, the median national property price has reached a record high of $753,654, with significant growth in cities like Brisbane, Adelaide, and Perth. CoreLogic’s chief economist Tim Lawless points out, “They’re continuing to see housing values rocketing along,” emphasizing the diversity beneath the market’s surface. However, he also notes a shift in demand from high to middle and lower price points due to reduced borrowing capacity and serviceability constraints.
This trend has particularly impacted apartment prices, which continue to rise in most markets. In fact, in every capital city except Darwin, the median apartment price exceeds $450,000, with Sydney reaching $836,000. As rents rise, with 30% of income now going towards them, rental markets remain tight, as Lawless states, “Rental markets are still as tight as a drum.”
The situation is echoed in Emily Holgate’s exploration of mortgage stress in Victoria, where homeowners, especially younger ones, face significant financial burdens due to interest rate increases. Jess Underwood, a homeowner affected by this situation, shares, “Our mortgage is our biggest expense and it’s non-negotiable, everything else shuffles around the mortgage repayments.” This narrative is becoming increasingly common as mortgage stress intensifies across the state.
The changing dynamics of the housing market have implications for first-time buyers too. Lawless suggests that purchasing an apartment may now be more financially feasible than renting, citing a Melbourne apartment example where buying could be cheaper than renting. However, saving for a deposit remains a formidable challenge, with Australians needing up to two years longer to save a deposit than in 2020.
Looking ahead, Lawless anticipates property prices to continue stabilizing in 2024, though much depends on factors such as further interest rate hikes by the Reserve Bank of Australia. He cautions, “The market is going to be different to what it was in 2023. We shouldn’t expect to see the same rates of value growth.”
These articles collectively highlight the complexities of the current Australian property market, where stabilization in property prices coexists with increasing rental pressures and significant mortgage stress, particularly among younger homeowners.
References:
https://www.abc.net.au/news/2023-12-01/corelogic-house-prices-november-rents-apartments/103171656
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