Is the unpredictable housing market beginning to ease?
Could it really be happening? Could the housing market be entering a more stable period? If the RBA’s decision to lift rates by only 25 basis points is anything to go by, homeowners and buyers could very well be entering a period of economic relief.
It’s likely there will be more hikes to come of course, but for now, it seems we are past the peak, and as a property buyers agent, I can safely say buyers are relieved to be getting closer to the terminal cash rate target for this cycle!
There are other signs that this tumultuous period is coming to a close though, so let’s take a look.
Clearance rates are in the green
It’s a good sign that sellers all over Australia are still taking their properties to auction every Saturday. It is also telling that buyers are still attending these auctions in abundance, eager to nab the home of their dreams against all odds.
Although the attendance at auctions was technically lower in September than in previous years, the clearance rate remains high with committed buyers purchasing properties left, right and centre. In fact, auction clearance rates were actually higher in both Brisbane and Sydney last month! Considering the auction clearance rate had dipped in the last quarter of 2021 and again by August 2022, it’s great to see that by October 2022 they were up by 4-5%. Hello, stability, our old friend!
Negative predictions didn’t come to light
In early 2022, a number of real estate experts and economists suggested there would be a decline in property values – predicting a massive slump of 15% by the end of 2022. Come October 2022, and nationally, the values were only down 3.4% from their peak, and a mild 0.9% for the month of September.
Though every Aussie capital city has shown a decline in property prices throughout 2022, with Sydney prices falling 3.7% and Melbourne down 2.1%, they are still significantly above their pre-pandemic levels.
Increased migration = greater housing demand
Due to the skills shortage in Australia, the government have responded with an increase to the annual permanent migration cap. This means 195,000 people will be entering the country each year, and each migrant will need permanent accommodation; this is on top of the influx of international students – a market that is making a rebound since the COVID-19 lockdowns.
With predictions that the resident population of Australia will increase by one million people by late 2025, we are made startlingly aware of the strain on housing supply, which brings us to the ever-increasing prices both buyers and renters are seeing today.
Interest rates are stabilising
Cheers could be heard right across the country when the central bank flouted expectations with a quarter of a percent rise in September – a far cry from the predicted interest rate hike of another 50 points, as economists had suggested.
Could it be that the return to typical rate hikes means the RBA is about to start slowing the pace of its tightening cycle? If so, hopeful buyers might enjoy a boost in confidence with the possibility of interest rates that allow for a mortgage that is well within their budget.
There is no guarantee in the property market that interest rates will remain the same or even drop, so it is likely we will see homebuyers continue to put a pause on their potential purchases while they wait to see what future economic events occur – in particular, whether the RBA will pause their tightening cycle, allowing property prices to find their floor once again.
But once all is said and done, buyers and sellers aren’t always beholden to the whims of the property market and will act according to their personal necessities and family or professional commitments. In the end, if purchasing or selling a home is like a ticking time bomb waiting to go off, unstable interest rates won’t deter a determined buyer or seller from getting what they want.
Want more property market information that is current and specific to your unique needs? Contact us at email@example.com – the friendly buyers agent team at K&M will guide you with all you need to know.