What on earth is happening with the property market this month?
I think the ABC said it best earlier this month: “The speed at which the housing market has bounced back has stunned many observers.” While Perth and Darwin haven’t kept pace, the real estate markets that we most closely monitor have sprung back to life as though a defibrillator has shocked them into action. Australia’s property market has had not one, not two but four consecutive months of growth. But has the turn been so rapid that some younger and newer buyers have missed their opportunity to join in?
History has a habit of repeating itself. If you cast your mind back to 2012, you’ll recall that we experienced rate cut after rate cut at the hands of the reserve bank. Sound familiar? These successive cuts triggered a housing market price surge - particularly in capital cities - the likes of which we were unaccustomed as a nation. Then we endured a painful downturn in values from about late 2017, nearly ten per cent, until now. But here we are: interest rates are being repeatedly cut again, three in quick succession and another predicted after three years of none at all. Are we potentially back in 2012 territory? It was those market conditions that were said to be responsible for pricing out first home buyers. The smashed avo debate started in these times afterall. With the recent addition of loosened lending criteria, do first home buyers have a better chance of entering the market now? Or has the ship sailed? Is affordability a mirage?
Can you crack into this market?
Auction clearance rates are back to healthy levels sitting above 70 percent for a number of weeks now, a property’s days-on-market are shorter, more buyers are out inspecting and home loan approvals are getting more ticks than before.
The turn-around in the market has been so fast, even analysts have failed to predict it. And if what we’re experiencing in national values growth this month continues, by June next year we’ll be seeing record housing values again.
Have first-timers missed their opportunity?
In the last few months, I have had so many first home buyers reaching out to me, seeing (finally) a window to crack into the property market: low rates (1950s-level), a quieter winter market, and loosened lending rules. But we’re in a totally different market now, investors are back with a vengeance now that evidence of capital gains can be seen. Plus, unrelentingly stagnant wage growth won’t help first time buyers.
But, if it’s what you want, we can get you there. And it seems, most first home buyers are undeterred by this shifting market. A major home loan insurer recently interviewed millennials and found 94 per cent of young people consider homeownership a high priority, with 66 per cent hopeful of buying in the next five years. More than half were working to save a deposit. The research also found young Aussies were shifting their expectations in order to meet the market, focusing on different areas or property types.
I love that resilience, we can work with that! With that attitude and determination, I can get first home buyer clients into the market before values return to record levels.
“New property boom looks imminent”
Let me paint you a picture of just how dramatic the turn in property market conditions has been. In June, we hit a floor of sorts. Since then, we’ve had nonstop growth for four months, an overall increase of 2.9 per cent in national dwelling values. In the last month alone, we had the biggest increase since 2015: 1.2 per cent in a month.
Of course, as always, it’s Sydney and Melbourne leading the pack, but the increase is spread across the nation thanks to that decline in interest rates, loosened lending regulations and buyers coming out of hibernation. So, the ship is sailing. Do you climb on board?
Want to beat the price surge as a first time buyer? Let’s get serious this summer.