Australian Property Market A Balanced Market for Buyers and Sellers
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The Australian property market is showing signs of balance between buyers and sellers, according to Pete Wargent, co-founder of BuyersBuyers, the first national property buyer’s agency network in Australia. Wargent believes that the recent interest rate hikes have had an impact on the housing market, but improved auction clearance rates indicate a more balanced market, especially for high-quality properties in popular areas.
Impact of Interest Rate Hikes
The interest rate hikes earlier this year had a significant impact on the housing market, especially for young borrowers who have never experienced such a tightening cycle before. The Reserve Bank’s 25 basis point hike this month has somewhat soothed buyer confidence, suggesting that we are approaching the terminal cash rate target for this cycle. Despite the initial fear, consumers are now tired of gloomy headlines and are choosing to enter the market.
Property Market Outlook for 2022 and Beyond
Doron Peleg, CEO of BuyersBuyers, states that capital city prices are currently around six percent below their peak, with further declines expected. However, there has been a steady improvement in the auction clearance rate, indicating a more balanced market. While property market indices may continue to show declines for some time, the rate of decline is likely to become less steep, and prices may bottom out in the new year.
Regional Variations
Peleg highlights that while some areas, such as Brisbane, have seen a correction in house prices, unit and townhouse prices have been rising in many cases. Sydney, on the other hand, still shows some weakness, but the scrapping of stamp duty for first homebuyers in the new year is expected to drive a recovery from the bottom of the market up.
Immigration to Fuel Demand in the Future
Looking ahead to 2023, Pete Wargent suggests that immigration may reach record highs in the next couple of years, with the annual permanent migration cap being lifted to 195,000. With the borders open and the return of international students and other temporary visa holders, Australia’s population is expected to increase by 1 million over the next two to three years. This influx of population may fuel demand in the property market.
Interesting Behaviors Among Buyers and Sellers
Tim McKibbin, CEO of the Real Estate Institute of New South Wales (REINSW), notes that the rising interest rates have resulted in some interesting behaviors among buyers and sellers. Some buyers are trying to time the bottom of the cycle and hold off on purchasing properties, hoping for lower prices in the future. However, this strategy may result in them missing out on their ideal properties.
For vendors, many are taking a wait-and-see approach due to buyer caution and economic uncertainty. McKibbin emphasizes the importance of a long-term perspective when considering property purchases. Housing is an essential commodity, and trying to predict the market cycle can be risky.
Conclusion
The Australian property market appears to be reaching a state of balance between buyers and sellers. While interest rate hikes initially impacted consumer confidence, improved auction clearance rates indicate a more balanced market. Although property prices are currently below their peak, the rate of decline is expected to slow down, with prices potentially bottoming out in the new year. The influx of immigrants in the coming years may further fuel demand in the property market. Buyers and sellers should approach the market cautiously, considering long-term perspectives and opportunities available now.
