Entering the market now presents an opportunity to acquire investmentproperty prior to any price rises.
2022 delivered a year’s worth of price declines.However, the opening months of 2023 have brought hope of a property market recovery. Values have stabilised, auction clearance rates are up and motivated buyers have been active. Experts are predicting value growth in major markets over the next two years.
Demand has recovered and places a floor under prices
A lack of supply of properties for sale or rent is the main factor keeping values strong, according to Real Estate Institute of Australia President Hayden Groves.
“We’ve seen an adjustment down from the very strong growth since the start of the pandemic, fuelled by very low interest rates,” says Groves. “Those markets have come off sharply, yet now seem to be reaching a plateau because of lack of supply.
“A very large cohort of would-be sellers are waiting in the wings, we’ve got population growth recommencing and this lack of supply is underpinning markets.”
Groves says the return of foreign workers and students will put more pressure on supply. “I’d be surprised to see any sort of meaningful downturn in property values, despite the fact that the Reserve Bank has put upward pressure on interest rates.
Rising returns keep investors interested
The soaring cost of rentals around the nation in recent years has been well documented and, with prices flat, rising rents mean higher yields for
As an asset tied to inflation, property allows landlords to receive inflated returns to offset their own higher costs of living. “The current level of supply is being met with the demand and
a bit of competition, and that’s pushing [rental] prices higher,” says Ben Kingsley, Property Investment Professionals of Australia chair.
“But I think we’re coming to the end of this aggressive tightening cycle of interest rates. And I do get a sense of people feeling a bit more comfortable that we’re close and we might see
an increased level of selling activity if we do see a pause in rate hikes.”
Outlook for houses – Brisbane
Brisbane’s infrastructure build ahead of the 2032 Olympics will improve values. The high inflation and higher interest rate environment will likely keep a cap on any breakout growth in the short-term, however with some economic analysts forecasting that interest rates could start declining even as soon as by the end of 2023, any containment of price growth may be short-term.
Return to growth
CoreLogic data substantiates Groves’ claims, reporting the number of new listings added to the market during what’s traditionally a hot listings period is down a sobering 27.3 per cent on the
same time last year and 21.3 per cent on the five-year average.
“Every year during the first half of March, there is a surge in listings, but not in 2023,” says CoreLogic Executive Research Director Tim Lawless. “This year, sellers have erred on the
side of caution, with new listings consistently below average.” The result has been too few sales for prices to fall, and home values in February recorded their first month of growth in more than a year. CoreLogic’s Daily Home Value Index also showed values up 0.3 per cent across major capitals over the first 15 days of March.
It seems pent up expectation may give way to a price surge.