John McGrath – Spring market outlook
A seasonal boost to listing numbers will provide welcome relief for buyers in today’s competitive market.
A low supply of homes for sale is the key reason why property values began improving in early 2023 despite interest rates continuing to rise.
Rising rates typically subdue the market but demand has been outweighing supply, leading to price growth.
Demand is strong for a number of reasons:
- Low unemployment, and a large cohort of cash buyers unaffected by interest rate rises.
- Surging migration with 715,000 (net) new migrants expected to arrive in Australia over the next two years (most will settle in Sydney and Melbourne).
- The return of foreign investors, including parents buying homes for their children who are coming back to Australia to recommence in-class university studies.
- Young families who can now work from home are continuing to leave the cities for more affordable seachange and treechange locations.
- Lots of support enabling first home buyers to buy, including the Bank of Mum and Dad.
The supply of homes for sale has been low for a while due to the market correction last year and continuing rate rises.
CoreLogic data shows listing numbers began increasing recently during the Winter season, which is a bit unusual. This could reflect a few things.
Vendor confidence may be increasing given improving prices and the likelihood that rates will stop rising soon. Others may be downsizing because the rate rises have made their repayments too high.
Looking ahead to Spring, increased stock will rebalance supply and demand, particularly in Sydney where fresh listings are already up 10% on this time last year and 18% above the five-year average.
The pace of home value increases has moderated in Sydney recently, with prices up 0.9% in July compared to 1.7% in June. This is likely the result of that extra supply flowing through.
Conversely, price growth is accelerating in Brisbane at the moment, up 1.4% in July and 1.3% in June, and stock for sale remains comparatively low for now.
If you’re considering buying or selling this Spring, it may be helpful to know the extent and pace of the market rebound in your area so far.
CoreLogic provides some helpful data in this regard.
Let’s start with the capital cities.
The market correction ended in Sydney in January. Since then property values have rebounded 7.6%.
The trough in Melbourne and Brisbane occurred in February and prices have risen 2.7% and 4.6% respectively since then.
Hobart and Canberra reached their market low point in April, and prices are rising slowly, up 0.1% and 0.7% respectively to date.
Now for the regions.
The market correction ended first in regional Queensland. This was no surprise. A continuing stream of interstate migrants is likely supporting a stronger rebound here.
The Gold Coast and Sunshine Coast markets are especially popular with young families from all over Australia who are making a lifestyle change because they can now work from home.
Regional Queensland hit its trough in February and prices are up 3.7% since then, which is a stronger growth rate than any other region.
Next to hit its market floor was regional Tasmania in March. Prices are up 0.3% since then.
The trough in regional NSW occurred in April and prices are up 0.9% since then.
The market correction has only just ended in regional Victoria in July, with prices steady for now.
Over the next few weeks, I’ll be providing some tips for buyers this Spring.
I’ll cover some of the top things to look out for at open inspections, what to ask the agent before making an offer, and some tips for negotiating your purchase.
Wishing you all the best this Spring.