Back In Vogue - Property Prices Continue Their Steady Rise
As inflation slowly eases and interest rates appear to have peaked (the RBA again kept rates on hold in October 2023 - that means interest rates have now been kept on hold for 4 consecutive months), property prices continue their steady rise according to market research just published by CoreLogic and PropTrack.
There was a rise of 0.8% during September 2023 in CoreLogic's Home Value Index (HVI). This was the seventh consecutive monthly increase. Since the property market reached its bottom at the start of 2023, the national HVI has risen just under 5% - CoreLogic’s research found that at a national level house prices are picking up faster than unit prices (on the Gold Coast, however, we are seeing a reverse of that trend with unit price rises slightly outpacing those for houses).
The highest increase in home values across the country was in Brisbane, which is up around 6.2% since the start of the year. As Gold Coast property prices generally fall more or less in line with those of Brisbane, we are of the view that the price increases seen in Brisbane can most likely also be applied to the Gold Coast.
As we have previously noted, the amount of property currently listed for sale is far below what would typically be expected. On the Gold Coast listings are still down around 20% for the time of year. It is this lack of stock that has been a major reason for the recovery in prices over the past few months. The age-old price equation therefore remains in play – where demand exceeds supply, prices rise.
With inflation and interest rates now seemingly both under control, we expect that the quantity of property on the market for sale will continue to be the most important factor to impact the market in the months ahead. Most property analysts are expecting a significant increase as sellers become more comfortable listing in the current stable market conditions which sees strong buyer demand. At Turner Mayes Real Estate we are certainly starting to receive a lot more active enquiries from owners interested in selling. As long as this increase in listings does not significantly outpace the level of buyer demand, we believe Gold Coast property prices are likely to continue their steady rise in the months ahead.
While the above is very good news for property owners, and especially those who are now looking to sell, it is important to highlight potential future market hazards.
Various property researchers are increasingly concerned about the record number of Australians suffering mortgage stress resulting from the jump in interest rates over the past months. Recent Roy Morgan (RM) research shows around 1.5 million mortgage holders were "at risk" of mortgage stress in the three months to July 2023 (an increase of around 640 thousand over the last 12 months). This figure is a new record high and even exceeds that of 2008 at the time of the Global Financial Crisis when the figure was 1.46 million.
In addition to those currently experiencing mortgage stress, an associated hazard concerns mortgage holders who are currently on low fixed rate loans (most expire later this year or in the first half of 2024). While they may not be under mortgage stress at this time, when their low fixed rates expire, many will be.
If a significant number of those property owners who either (i) are currently experiencing mortgage stress or (ii) will in the future experience mortgage stress at the end of their low fixed rate loans, start to flood the market with properties for sale, then we could see an end of the current stable market conditions. This could see prices start to fall.
If you are considering selling and want to avoid the potential future hazard of a disrupted market and falling prices, then now would be a good time to do so. With current very strong buyer demand, the Spring selling season is already off to a good start.
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 your sale or purchase of a property, please contact Peter Turner.