As property prices start to climb, listings are following suit. So if you’re hunting for a home, what does this mean for you?
If you’ve been looking at the property market over the last six to 12 months, you probably already know that while property prices have dropped, it’s been a case of slim pickings due to the drastically low number of listings.
But prices look like they are starting to bounce back, with March heralding a 0.6% increase in national property prices, according to CoreLogic. And listings are following suit.
So why has the market changed? And what does it mean if you’re looking to buy?
Property prices and increased demand
When the RBA announced its rate rise pause in April, we all let out a collective sigh of relief.
And many financial and property analysts, including CoreLogic, estimated the pause may entice more buyers to get back on the property market, in turn boosting the prices.
But there are other compounding factors that were influencing the pricing upswing before the rate rise pause.
Record low listings, a competitive and expensive rental market, and elevated migration placed increased demand on limited housing supply.
And prices started to climb despite consecutive rate rises.
Rising prices, combined with the Autumn selling season, have seen vendor confidence pick up and property listings increase.
But how does this affect you if you’re looking to buy?
Opportunity may be knocking
If you’ve been ready to buy but haven’t been able to find the right place due to low supply, now may be the time to purchase – before FOMO starts to kick into the market.
More listings mean you’ll have a greater chance to find a suitable abode, rather than sifting through the dregs.
But before you pounce on that perfect property, it helps to have your finance sorted.
How Soho Home Loans can help
Finding out your borrowing capacity and loan options are important steps when planning to buy.
And while the RBA’s pause bolstered our spirits, it’s wise to be mindful that there are a couple more cash rate rises expected.
Getting advice on the right type of loan, assessing your borrowing power, and organising your finances could make things smoother. You should also arm yourself with tips on handling the interest rate rises so you are prepared ahead of time.
So if you’re keen to purchase in 2023, or worried about why houses are so expensive in Australia, we can help. Get in touch with Soho Home Loans and we’ll get cracking on finding you a mortgage solution that will suit your individual needs.
How much will house prices drop in 2023 Australia?
It is difficult to predict with certainty how much house prices will drop in Australia in 2023. But, according to Property Update, despite 10 consecutive interest rate hikes from the Reserve Bank of Australia, property prices have not fallen as expected. Instead, they have remained stable and even experienced an increase in some cases. The peak-to-trough change in house prices was only 9% according to Corelogic, which has left some analysts confused.
However, there may be more rate hikes in the future, which could impact the property market. The RBA data indicates that the majority of mortgage debt is on variable terms, which could be affected by rate hikes. Additionally, inflation appears to be falling, and the RBA has paused its aggressive interest rate rises. Consumer confidence may return once interest rates and inflation peak.
It is also worth noting that the next stage of the property cycle is the stabilisation phase, not a rapid recovery. While lower listing volumes may help protect the market from further downward pressure, the rental crisis is ongoing, and rents will likely continue to increase this year.
Overall, while there are signs of stability in the property market, it is impossible to accurately predict how house prices will behave in 2023. Factors such as future interest rate hikes, inflation, and the rental crisis will all have an impact, and it is important to continue monitoring the situation closely.
Are Melbourne property prices going down?
Melbourne property prices have been on a downward trend since late 2021. The NAB is predicting another 12.7% drop this year. This is the largest annual decline in Melbourne property prices since the global financial crisis.
There are a number of factors contributing to the decline in Melbourne property prices. These include:
- Rising interest rates: The Reserve Bank of Australia (RBA) has raised interest rates ten times since May 2022 in an effort to curb inflation. This has made it more expensive to borrow money, which has reduced demand for property.
- A slowing economy: The Australian economy is expected to grow at a slower pace in 2023. This is due to a number of factors, including rising interest rates, supply chain disruptions, and the war in Ukraine. A slower economy is likely to lead to lower demand for property.
- Affordability constraints: The cost of living in Melbourne has been rising rapidly in recent years. This has made it more difficult for people to afford to buy a home.
It is difficult to say for sure whether Melbourne property prices will continue to fall. However, it is likely that they will remain under pressure in the near term.
