Soothsaying
With countless factors contributing to market flux, predicting the future of house prices can be about as reliable as reading a crystal ball. While we don’t recommend crystal balls or other soothsaying techniques when looking to make your next property move, a solid knowledge of what drives the market can tell you when the market will peak. Right now, these factors suggest that current growth in the Australian housing market – not seen since the 1980s – is starting to slow.
Supply and Demand
The first factor that influences house prices is supply and demand. These two elements are synergistically connected, and if they are not well-matched, prices shift accordingly. 2021 saw strong buyer demand fuelled by low-interest rates, but current indicators suggest that demand is waning. Weekly searches on realestate.com.au declined by 16.2% in Nov-Dec 2021. Lower demand means slower price growth as vendors must compete for fewer buyers.
Location
As mentioned in our last blog post, the old axiom is true; location, location, location, is all-important when considering a property’s value. Current trends suggest that Australia’s hottest locations are changing. In 2021, regions outperformed capital cities meaning previously safe properties such as cookie-cutter CBD apartments are now riskier for investors. The Southern Highlands, Mid North Coast and Shoalhaven saw an over 120% rise in property seekers in 2021. The locations expected to remain popular post-pandemic are those referred to as “commutable regions” (those within 200km of a state capital).
Growing?
Current predictions from CoreLogic suggest that while the market hasn’t yet reached its peak in terms of values, it has reached its peak rate of growth. Sydney’s monthly growth rate peaked at 3.7% in March 2021 and has since reduced to 0.3%. This means that while property prices are still growing, the rate of growth is slowing down, and the peak of prices will come soon. What the peak and its aftermath mean for your property specifically will depend on location and market supply, among other factors.
Predictions are never as clear as your local soothsayer would have you believe. Still, knowing what factors to look out for will help you to know the peak when you see it.
If you want to make informed decisions in the property market but don’t know where to start, why not contact one of our property experts today and tap into 90 years of Australian housing market knowledge?
Call John Wills on 0467 443 838 or email john@willsproperty.com.au
