According to the ANZ’s latest housing report, property prices are set to fall by almost 20 per cent by the end of 2023 which would scare any mortgage holder, but we need to question what this actually means? What property markets are they referring to?
The basis of the housing report produced by ANZ senior economists, Felicity Emmett and Adelaide Timbrell, continues on to explain a housing crash is predicted from the impact of Australia’s rising interest rate. However, they fail to acknowledge that Australian Property can not just fall under one umbrella as a single property market because there are many property markets and each has its’ own price drivers.
Yes, we have seen decline in prices at the top end of the market and in some of the capital cities but not all markets are reacting the same and there are still a lot of other price growth factors influencing housing prices.
What’s happening right now.
Migration
As the international borders are open, we are seeing increasing immigration rates and international students return to the rental market which is bringing a new market of property buyers, international investors, and renters into the market.
Construction
The current supply in housing is not meeting demand due to a slowdown in construction. At the same time, Builders are struggling to keep up with demand and they simply can not build houses fast enough in this current market. The current back log of construction jobs (both builds and renovations) will keep builders busy for at least the next 12 months.
Another aspect is the price of materials has drastically increased due to limited supply, so some people who already have building approvals are choosing to hold back until supplies increase and the cost of raw materials comes down. This will lead to a higher demand for construction towards the end of 2024 (when we expect interest rates to ease) which will ease some of the supply issues.
Lifestyle
We have seen some property markets rising despite the increasing pressures (interest rate rises and inflation) on home owners. There is a lot of activity happening regionally, with more people willing to move away from the capital cities as a lifestyle choice and companies more willing to allow employees to work remotely.
Government spending
Government spending on infrastructure will continue and there is a lot of post lockdown infrastructure and building to catch up on with committed spend for new roads, hospitals, universities, transport, etc.
This is in addition to the State Governments introducing new incentives to help first time home buyers enter the property market. Buyers that previously were unable to borrow enough, or save enough deposit are now entering the market. This has increased the demand for property, especially in the lower price points.
For Homeowners
Even the grim ANZ housing report predicts that this period will only be short lived. It is predicted that we will see the easing of interest rate rises towards the end of 2024 as well as property prices to rise.
If you are a homeowner, it might not be the best time to sell at the moment but if you plan to live in your home for the foreseeable future (well, at least the next 2 years) then you probably won’t be much worse off. Plus, you may have already rode the housing price ‘wave’ during the pandemic which saw property prices increase despite “experts” predictions of a property market crash- which never came to fruition.
If you are looking for a buyer’s agent to assist you with purchasing a home or investment property in the Sydney, Brisbane and Newcastle regions, as well as SA, TAS, ACT, VIC, NSW & QLD please get in touch with Lloyd Edge and his team at Aus Property Professionals here or give us a call on 1800 146 837!
