- PIPA has released its latest National Market Update
- One expert observed Tasmanian buyers may be 'fatigued'
- Melbourne saw a two speed market with buyers disinterested in renovation projects
Residential investors have likely shelved the idea of “wait and see”, with the latest from Property Investment Professionals Australia (PIPA) finding increased activity from educated buyers and investors.
Nationally, property prices recorded a small uptick in the latest house price indices of PropTrack and CoreLogic. That wasn’t consistent city by city, with recent Domain data also showing varied price activity across the country.
The latest from PIPA’s National Market Update pulls together insights and analysis from market experts and PIPA members around the country from the latest edition of the organisations magazine.
Perth remains affordable
The Western capital continues to enjoy a relatively affordable market and did not have the same experience as most other cities across the country.
“The Perth residential property market has not experienced the same contraction felt throughout most of Australia, growing by 2.4% over the 12 months to February 2023,” said Momentum Wealth‘s Damian Collins, citing CoreLogic data.
“WA remains relatively affordable due to its low housing prices, strong income, and labour market.”
REIWA figures showed Perth continued to see listings under what is considered to be a balanced market, Collins noting: “… the number of properties listed for sale have remained below 8,000 since the beginning of 2023. This is far below the typical balanced market range of 13,000 to 14,000 listings.”
Perth’s rental market was doing it particularly tough, Collins said: “Rental listings have also fallen from the 11,000 experienced in 2016 to being consistently under 2,000 since August 2022. A balanced market in WA typically sees around 6,000 rental listings.”
This was largely put down to construction challenges.
Collins also noted that supply “is expected to tighten as supply is unable to keep up with the growing demand of a rising population.”
While the southern capital recorded a quarterly property price decline of 1.5%, it remains the best performer in the country. Quoting CoreLogic data, Peter Koulizos said: “Adelaide property prices are 5.1% higher today than they were 12 months ago. This is the best performance of all the capital cities.”
“If we go further back in time to analyze the great southern state’s performance since COVID-19, property prices have increased the most when compared to other capital cities – up 44.7%. Since its peak in July 2022, property prices have decreased just 2.3%.”
The Adelaide Hills were alive with the sound of music too (perhaps a bit further out), with the data showing South Australia’s regional areas saw even higher growth, at 47.6%; Koulizos added that there has been no decrease in property prices since its peak.
Tasmanian buyers ‘fatigued’
According to Propertyology’s Simon Pressley, the island state had a strong first half in 2022, before closing out with a “mild reduction in asset values in most locations across the state.”
Pressley observed that while all the key ingredients for a booming property sector were there, one key reason could be holding it back:
“Tasmania recently broke an all-time record for job participation, the economic outlook continues to be outstanding, household wages are up, household equity is through the roof, the tourism industry is rocking it and rental vacancy rates across the state remain locked in at less than one per cent.
“Ordinarily, these are conditions for a spectacular property boom. Ordinarily, that collection of characteristics creates significant confidence for real estate buyers.
“A deep dive into lots of different data sets reveals that the current softening in the market is caused by an intangible phenomenon that we call “buyer fatigue.”
“The state, especially Hobart, has enjoyed one of the longest growth cycles that any Australian city has ever seen. So, it is possible that buyers are now catching their breaths.
Pressley added that the market softening correlates with the start of this interest rate cycle in May 2022.
He also noted:
“The volume of properties added to the sales market each month remains at normal levels, so there’s no evidence of distressed sales or excess housing supply.
“Oversupply is not an issue, but what is listed for sale is taking longer to shift.
Melbourne disinterested in renovations
Cate Bakos from Cate Bakos Property noted that Melbourne is seeing a two-speed market, with quality properties flying off the shelf, the opposite, ‘languishing’.
“February’s overall capital growth movement of -0.4 per cent certainly signals a slowing of price falls, easily attributable to low listing numbers,” said Bakos.
“Buyers remain disinterested in renovation and/or development projects and today’s buyers are applying high scrutiny to each listing in the quest to buy well, however, it’s becoming abundantly clear to these buyers that a low level of listings in the renovated house segment is underpinning the market firmly and contributing to price increases.
New South Wales a mixed bag of results
That’s the observation of Property Buyer’s Rich Harvey, who noted that despite borrowing capacity reducing by 30%, “… the property market has only receded around 12% to 15% in most places.”
The price drops have also slowed, Harvey noting that the market has likely reached a point of inflection – some believe its the bottom of the market, others, close to it.
A resurgence in buyer numbers at open house inspections comprises a mix of individuals:
“A number of different buyer groups make up this enthusiastic pool – being first home buyers looking to take advantage of all new stamp duty concessions, upgraders seeking to find better quality housing, particularly in the $2 million to $3 million range, downsizers looking to capitalise on their capital gains from the COVID period, prestige buyers being opportunistic and looking to park their cash into luxury beachfront and waterfront properties, and finally expats returning and taking advantage of better currency conversion.”
Demand across the board in Queensland
It seems there’s something for everyone in the Sunshine State, EKR Property’s Edward Reavy noted Brisbane’s affordability and lifestyle was a key driver for the large volumes of migration into the city.
“With recent interest rate hikes, the borrowing capacity of the average buyer has reduced considerably, and the price bracket they could previously afford to buy into is no longer attainable,” said Reavy.
“However, comparably in Queensland, they can buy a far superior home in a prominent location within their borrowing budget. This demand is growing momentum which will help fuel home prices and drive the rental market in the Sunshine State.”
He added that the regions may also see an influx of people.
“Some South-East Queenslanders that are retiring or seeking a slower pace of life as the masses move to this region are selling up and moving further north to more affordable and quieter regions.
“Towns such as Hervey Bay, Bundaberg, Rockhampton, Mackay, Townsville, and Cairns are benefiting from infrastructure spending and employment opportunities, attracting people and putting pressure on the local housing and rental markets in those regions.”