Will the property market downturn continue or has it bottomed out?
Just as no property boom lasts forever, no correction lasts forever. You can never know for sure when a downturn has ended until several months after the event. That said, there are tentative signs the market is now at or close to the bottom.
Consider these two pieces of evidence.
First, in February, the nation’s median property price fell only 0.14%, according to CoreLogic, which was the smallest monthly fall since May 2022. The result was driven by Sydney, where prices rose 0.3%.
Second, halfway through March, CoreLogic released new data showing the momentum had continued. For the four weeks to March 15:
Sydney prices rose 0.8%
Melbourne rose 0.2%
Perth rose 0.1%
Brisbane was unchanged
Adelaide fell 0.4%
It’s all about supply and demand
The property market, like any other market, is all about supply and demand, so it’s no surprise this potential housing turnaround can be explained by both supply and demand factors.
On the supply side, the number of new listings is very low. In the four weeks to March 15, capital cities listings were 19.9% lower than the previous five-year average for that time of year, according to CoreLogic.
On the demand side, migrants are returning to Australia in significant numbers. The latest Australian Bureau of Statistic data shows there was a net increase in the migrant population of 303,700 people during the year to September 2022, which was higher than before the pandemic (see graph below).
In any market, a decrease in supply and an increase in demand put upward pressure on prices.
Two more reasons to be cheerful
There are other positive signs. First Home Buyer Choice has made it easier for New South Wales first home buyers to enter the market, by giving them the option of waiving stamp duty (in return for paying a much smaller annual property tax).
Also, the Reserve Bank of Australia seems like it’s almost ready to stop increasing the cash rate. In a recent speech, RBA governor Philip Lowe said that “with monetary policy now in restrictive territory, we are closer to the point where it will be appropriate to pause interest rate increases to allow more time to assess the state of the economy”.
Why now might be the right time to consult finance brokers in Sydney
It’s too early to say property prices have stopped falling – or, for that matter, that interest rates have stopped rising. But if we’re not yet at the end, it seems we’re very close.
So if you’re thinking about buying your first property or purchasing an investment property, now might be the right time to speak to a mortgage broker in Sydney. Otherwise, you might be forced to buy in a market in which prices and competition are increasing.
Eventus Financial is an award-winning mortgage broker, and one of the best brokers in Sydney, with over 350 five-star Google reviews. Schedule a no-obligation consultation with Alex to find out how we can help you too.