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Australian home values have risen for a 14th consecutive month and have defied expectations of a slower rise as demand continues to outstrip supply despite the ongoing cost-of-living pressures and high interest rates. Though it appeared to be plateauing late last year, with the ongoing imbalance between housing supply and demand, and despite three rate hikes, worsening affordability, and the rising cost of living, values keep pushing higher. The average price of a property within Australia sat at $765k this quarter, an all-time high of $63k and nearly 9% above the same period 12 months ago.
Increases were not confined to specific areas, and were found to be the case in almost 90% of markets across the country. Keeping in mind the increasing housing affordability issues, it is makes sense that demand has skewed towards the middle to lower end of the value spectrum. Looking at Sydney in particular, growth was up by 0.3%, with the median predicted to soar close to $2 million as anticipated interest rate cuts and a sustained housing shortage kickstart the next growth spurt.
The federal government’s goal of getting 1.2 million well-located homes built nationally in five years starts on July 1, though there is yet to be a meaningful increase in building approvals to start reaching that target. Some 12.85k homes were approved for construction in January, well below the 20k average monthly run rate of approvals to reach that goal. Without a catchup in supply, the Australian housing market is likely to be navigating an undersupply for a few years to come.
There were signs of strength and resilience, though this has been a tumultuous time , as Adrian Tsvalas from Adrian William Real Estate shared, ‘It felt like the market wobbled in October and November with the buyer pool not being able to adequately absorb the increased stock levels of the Spring rush. Though it seems as if buyer confidence is returning as the year progresses”. Nevertheless, for now the market remains lacking in stock while climbing steadily in price. Gautier Lam from Hudson McHugh added, “Generally speaking, in the Inner West there are no ‘bargains’, but there is definitely evidence of properties that sold earlier in the year that have already experienced growth since, due to other high performing sales in the area. Stock levels for sought-after properties continued to remain very low, so demand for those went through the roof the last few months”.
- Lower Inner West
- Bayside
- The Peninsula
- City Fringe
With the second quarter already filled with multiple interruptions (school holidays, public holidays), the news filled to the brim with a sad state of affairs is raising the question, how will this impact the overall market sentiment? Potentially, these flow on effects are already becoming visible and weighing on buyers decisions, with talk of rate cuts being pushed later into the year, if not next. Jack Tinworth from Cobden Hayson elaborated on this, “Zooming in on the local Balmain and Rozelle markets for a one week period, we noted there were 9 scheduled auctions last Saturday with 0 properties sold. This knowledge is met with shock by clients, as most people have a top-level view of the property market and hold the opinion that premium suburbs always do well. But rarely do many get right into the detail”.
“With stock levels very tight over the next 3 months, A grade homes will remain highly sought-after and will trade at a premium, B grade homes will trade fairly. C and D grade properties will remain more difficult unless they are priced to sell”, said Adrian Tsavalas from Adrian William Real Estate. Buyers do seem to be building enthusiasm towards moving forward quickly and decisively for the right property, and premium homes will likely attract growing buyer competition and premium sale prices. With a slow rumbling FOMO, and prices on the up, Gautier Lam from Hudson McHugh adds, “Stock levels seem to be remaining very low for sought-after pockets/properties, so if you have an opportunity to secure something, do so sooner rather than later as it seems like prices are only going to keep rising”.
Jack Tinworth from Cobden Hayson wrote, “The winter months could be quite choppy for sellers but at the same time, very good buying opportunities will open up. This is the key takeaway, while there is so much noise and conjecture in the media, it remains important to get back to the long-term fundamentals of buying a quality property in a growth market. We know loan approvals across the board are rising, so the smart money is already eyeing off opportunities. Our advice is to stay alert and pay close attention to how your desired market is performing”. So, if you are in the market for a property, it may just be time to enlist the support of a buyers agent who can navigate you through the fractious elements, keep you apprised of opportunities on and off market, and help you get the home you desire.
Get in touch with Hamada to find out more about the Sydney Inner West property market, or make an appointment to discuss your requirements and see how we can help you get into your ideal home sooner.
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