After a decline during the last year, the Australian housing market is on the upturn once again. Homeowners and investors will be encouraged by the results of Domain’s research into housing market price pressures and the resulting predictions for a steady recovery during the 2023-24 financial year.
October 4, 2023
After a decline during the last year, the Australian housing market is on the upturn once again.
Homeowners and investors will be encouraged by the results of Domain’s research into housing market price pressures and the resulting predictions for a steady recovery during the 2023-24 financial year.
Downward pressures stemming from potential distressed sales, sluggish wage growth, and the possibility of an increase in the unemployment rate are a few of the current factors influencing the housing market. The market is also constrained by a shortage of supply within the construction industry, and many existing homeowners’ reluctance to sell in the slower market conditions. However, these factors are not anticipated to have a significant dampening effect due to the counterbalance of rising demand from migrant intake and predicted interest rate cuts.
Opportunities abound for both owner-occupiers and investors.
Sydney prices increased every month between February and July 2023. Although the pace of growth appears to be slowing, Domain predicts a further house price increase of 6-9% by the end of the current financial year. Units are expected to lift by a more modest 2-5%. Canberra house prices may see a modest increase, but a 1-2% drop is predicted for units.
Corelogic notes that Sydney’s median housing value is currently rising by $4,262 per week, while both the number of homes listed for auction and the clearance rate are increasing. Buyers ready to discuss their finance options may find that this is a good time to make a move.
Melbourne’s housing market saw a significant downturn in 2022, with a 9.1% drop from its peak in February. However, it’s now on the upswing, with several indicators, including Corelogic‘s home value index and Proptrack, showing positive gains in 2023. This creates an opportunity for homeowners, investors, and businesses to consider entering or re-entering the market.
Melbourne’s status as Australia’s largest capital city, combined with its lifestyle and job opportunities, continues to drive demand. However, Melbourne’s housing market is diverse, with sub-markets performing differently. While some areas like the Inner and Outer East are showing slight gains, others in the North West and West are stabilising, and a few regions are still experiencing declines. This diversity provides affordability advantages for homebuyers and investors, depending on their target areas.
Overall, the message for those considering the Melbourne property market is to take a long-term view, as the city is now in the early stages of recovery, and strategic investments in quality properties are likely to hold their value well.
There are signs that a price recovery is underway in Brisbane, following an 8.2% drop in the year to June 2023. Queensland’s population is expected to grow by 16% to 6.2 million by the time Brisbane hosts the 2032 Olympic Games, as the northwards migration from New South Wales and Victoria continues.
This means that owner-occupiers and investors could both benefit from taking a long-term view, by investing now in a market that is expected to show strong future growth that will outlast any short-term downtrends.
Adelaide has beaten its higher profile rivals with an outstanding 44% house price increase since the pandemic hit in March 2020. Remarkably, units increased by 14% in the year to June 2023, and, in good news for investors, rents are expected to rise following an influx of workers for the AUKUS submarine plan and other infrastructure projects.
According to the University of South Australia, Adelaide’s cost of living is lower than that of any other Australian mainland capital, which goes some way towards explaining the appeal of its housing market. This may be especially true for any first-time buyers who are not constrained by location in this era of remote work, and who would like to get a foot on the first rung of the property ladder.
Domain predicts a 1-3% increase for both houses and units in Perth by the end of this financial year. The median house price is expected to reach a new high of over $700,000, and the growth in unit prices will see them return to a level approaching the record highs achieved in 2014 as a result of the mining boom.
WA has benefited from a huge increase in skills-driven migration since the international and national borders reopened post-COVID. The population increased by 2.3% in 2022, the highest growth of all states and territories. An article in WA today quotes Domain’s research chief, who says that 130,000 extra dwellings will be needed in the next year, and that population pressures will continue to drive housing prices higher.
Figures released by the NT government show a 0.9% increase in house prices and a 0.3% unit price increase in the June 2023 quarter, even though prices had decreased on an annual basis. This suggests that the market may be turning upwards, and investors will be pleased to note an annual rent increase of 8.3% for houses and 4.6% for units.
An NT government housing report reveals that Darwin has the lowest median unit price and second lowest median house price of all the eight capital cities. However, its median weekly rents were much higher up the scale, making it a strong proposition for investors.
Tasmania has long been a difficult market for buyers, with typical house prices steadily rising by a total of around 78% between January 2018 and July 2022, while unit prices lifted by about 67%. However, the market cooled and median prices fell in the last 12 months.
The Real Estate Institute of Tasmania’s June 2023 quarterly report, while noting the withdrawal from the market by many investors, points out that the fall in median house prices does not necessarily mean that house prices have fallen. Rather, it reflects the fact that the largest proportion of sales is occurring in the middle to lower levels of the market, as a result of higher interest rates eroding purchasers’ borrowing power.
Domain research is in fact predicting a turnaround to growth in the coming year – a 3-5% lift in Hobart house prices, and an increase of 1-3% for units, so now could be a good time to move in a buyers’ market which may prove to be merely temporary.
Both homebuyers and investors can benefit from talking to their finance broker, who has a constant finger on the pulse of the housing market and an in-depth knowledge of competitive home loan options. They can tailor a solution that’s right for you, so give them a call today for a no-obligation chat.
This information is for general information purposes only. The information contained herein does not constitute financial or professional advice or a recommendation. It has not been prepared with reference to your financial circumstances or business and should not be relied on as such. You should seek your own independent financial, legal and taxation advice as to whether or not this information is appropriate for you.
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