Domain market analysis and predictions for spring
Recently, Domain released two articles outlining some key learnings about the Aussie real estate market and its cycles based on data from the last 3 decades.
Dr. Nicola Powell Chief of Research & Economics for Domain and one of the country’s leading property market experts identifies that looking at the data historically provides a different perspective on the Australian property market to the main media rhetoric.
Dr. Powell’s data debunks the theory that Australian house prices do not go through “wild boom and bust phases” but rather we see periods of soaring gains and minor declines. She notes the data over the past 30 years indicates a rise of 32.7% from the point of price trough to peak over 2.75 years and a downturn of 3.0% over 0.75 years, on average.
Further Dr. Powell notes that this peak and trough is an indication of a healthy market and likens it to healthy economies, which have similar ups and downs. Her main point is that time spent in the market, or how long you hold your property, is far more relevant than the timing of when you sell or buy.
Regarding premium-priced areas, Dr. Powell notes that these areas tend to lead the downturn which has been evident in both the Sydney and Melbourne markets recently, however she also notes importantly that these markets tend to see greater rates of price growth during the upward growth phases.
This mirrors our view and the advice we have been providing to clients, which is that now is a great time for savvy buyers to get into the market. The opportunity for this won’t last long and those who do have the courage and tenacity to seek out and secure great opportunities right now will be rewarded greatly in the next upturn.
Regarding interest rates, Dr. Powell notes that households in Australia are more resilient to rate rises attributing this to asset balance sheets being in a good position, strong growth in house prices, solid household savings, and some mortgage holders being ahead of their repayments.
Further Domain research predicts that the transition from winter to spring will see a lift in new listings and an emergence of more buyers which will be a test of the property market since interest rates started to rise.
The research also shows an increase in interest in apartments, with evidence suggesting that the demand for houses has consistently decreased during 2022 due to financial limitations and relative unaffordability related to houses over apartments. Unit pricing outperformed house pricing for the first time in 3 years across the combined capital cities, according to the article.
In terms of spring predictions Domain’s data points to an upturn in buyer demand as the selling season approaches despite a slow winter (11.6% lower for houses and 10.7% lower for units than the 3-year winter average).
The expectation is that most capital cities will be operating in a less competitive market than we have seen in recent years.
In saying that though, it is the first spring we have seen in 3 years that is unhampered by COVID lockdowns, the increase in listing numbers will provide an interesting assessment of the of the property market since interest rates rose. Domain’s predictions say that this will be most impacted by the number of active buyers that come into the market and whether sellers are willing to meet the market with realistic price expectations.
Read the full articles here:
Can we learn from previous price cycles with Dr. Nicola Powell
Domain’s buyer demand indicator for August 2022
We are for apartments.
If you are considering selling or leasing your apartment in Sydney City its surrounds, we would love to help you. Ayre Real Estate are specialists in apartment living and ready to help find your ideal property. Talk with us today to find out more.
