At Last There's Some Clarity On Where The Property Market Is Heading
The RBA first started to raise interest rates in May 2022 and its changing policies on rates since then have made the property market a very uncertain place. Nobody has been able to assess if future price movements would trend up, down or sideways.
This market uncertainty has affected all property owners and those looking to buy. Particularly affected however are those owners who have been wanting to sell for the past months but who have lost confidence in the market to be able to list their properties for sale. Owners don’t want to sell in a depressed market nor do they want to sell just before an expected big increase in prices. Having some degree of clarity on where the market is going is important for us all.
We believe the fog of uncertainty that has been shrouding the market for over a year is now starting to clear (at least through to the end of 2023 / early 2024). This is because it seems likely interest rates have peaked after the RBA, at their August 2023 meeting, left them on hold at 4.1% for a second consecutive month. CBA, Westpac and ANZ have all just revised their forecasts to say they do not expect further rate increases (CBA even went so far as to say they expect interest rates to start being reduced as early as March 2024).
While property prices dropped in 2022, they have very slowly been rising so far this year with national home prices up 1.35% from 12 months ago. This rise has been mainly due to the lack of sale listings which has led to more demand for property than there is supply (Increased Demand + Lower Supply = Price Rises).
Looking forward to the end of 2023, many property analysts see continued price rises. PropTrack’s Property Market Outlook (August 2023) says national prices are expected by the end of this year to have increased by 2% to 5%. In our view, the increase will probably be around 2%.
Moving ahead in to 2024 the picture once again becomes less clear. For instance, while sale listings currently remain around 20% lower than what would be expected (including on the Gold Coast), listing numbers are slowly picking up as sellers start to feel more confident about the market. A significant increase in sale listings is then expected towards the latter part of 2023 / early 2024 as a large volume of distressed sellers start to enter the market before their current low fixed rate mortgages end. Something else that’s likely to lead to a further increase in properties being listed for sale is the steadily rising unemployment rate (people without jobs tend to sell their properties). Depending on the size of the increase in the supply of available properties, there could be downward pressure on prices next year.
In summary, with interest rates most likely having now peaked, property market conditions have become more settled with prices likely to continue rising through to the end of 2023. So, if you are considering selling, now would be a very good time to do so while supply remains low and buyer demand remains very strong (how long this “sellers’ market” will last is hard to know). A strong Spring selling season is therefore expected.
If you have any questions about the matters referred to here, or you would like to have a confidential discussion about how we can help you with the sale or purchase of a property, please contact Peter Turner.