What Owners Should Know About The Latest Movements In Gold Coast Property
Interest Rates – Up Or Down?
At its most recent meeting, the RBA has again kept interest rates on hold at 4.35%. While this is good news for homeowners, it said that a future rate increase can’t be ruled out given that inflation is still not within its target range of 2% to 3%. Many economists had previously thought that we will start to see a cut in rates towards the end of 2024 but things now seem more mixed with some expecting possible rate rises in the coming months. With inflation still well above the RBA’s target range, which way is the RBA likely to go?
Australia is experiencing a cost-of-living crisis which in significant part is driven by many property owners now paying around 6% to 7% interest on their mortgages (according to the Real Estate Institute of Australia, the average household is spending about 45% of their income on mortgage repayments with many experiencing mortgage stress). The government and RBA therefore need to be very careful not to “crash the economy” by raising rates or leaving the current cash rate elevated for too long. But even with this very obvious economic risk, what direction rates will take in the coming months is very unclear at the moment.
Latest Property Price Movements
Despite current high interest rates and cost of living pressures, the property market remains strong. In January, prices were up 0.4% across all capital cities (save for Hobart), then in February the lift in prices accelerated to 0.6%.
This ongoing rise in prices reflects a continuing imbalance between supply and demand which varies in scale across our cities and regions, something we have noted on a number of occasions in our market updates over the past 12 months.
The RBA's latest decision to keep interest rates on hold, even with the uncertainty of the direction of future rate movements, is likely to further incentivise buyers to secure available properties. We may well now be in a period of Buyer FOMO (Fear Of Missing Out) which could accelerate the rate of property price rises.
Given the upswing in the market over the past couple of years, many analysts at the major banks now feel that property prices across Australia are overvalued by as much as 25% to 30%. That does not present a particular problem unless there is a sudden change in the economic environment. Say for example Australia enters recession; or there’s a significant rise in the unemployment rate; or we see a huge cut-back in immigration levels (something the government is now looking to action). If any of these eventualities were to occur, it’s always possible property prices could start to drop.
Another factor that could have a negative impact on continued rising property prices is having a significant increase in the number of properties listed for sale - where supply equals demand or even exceeds demand. Over the last 2 to 3 months our office has started to receive more enquiries from owners looking to sell their properties. While there has been a slight uptick in Gold Coast properties on the market for sale, at this stage the supply of new listings is not excessive and therefore, demand still continues to outweigh supply.
In summary, as long as there is no future decision to increase interest rates, we believe the Gold Coast property market will remain stable in the coming months. But if there were a rate increase, a sudden negative change in the economic environment or a significant rise in the number of properties being listed for sale, it is always possible that a drop in prices could occur.
For those of our clients who are considering selling, we have explained to them that now is a good time to do so given that the market is stable and buyer demand is extremely strong. If you are thinking of selling and would like a free appraisal of your property, or if you’d just like to have a confidential chat about market conditions etc., please do not hesitate to contact us.