As a roaring spring begins, where are home prices headed?
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As a roaring spring begins, where are home prices headed?

It’s a busy weekend for Australian residential property as confidence returns amid steadying interest rates

By Shannon Molloy
Fri, Sep 1, 2023 9:51amGrey Clock 3 min

Spring is here and so too is one of the busiest auction weekends of the year, with vendors feeling confident and buyers out in force – a trend economists expect to continue.

Research firm CoreLogic reports a whopping 2401 homes are set to go under the hammer across the country on Saturday, up 5.4 percent on last weekend and the third largest volume of 2023 thus far.

“Auction activity across Sydney is set to exceed 1000 for the second time this year, with 1010 homes currently scheduled to go under the hammer this week… up 16.5 percent,” CoreLogic economist Kaytlin Ezzy said.

Strong momentum in property markets continues to defy expectations.

About this time last year, most pundits were predicting steep price falls throughout 2023 on the back of soaring interest rates.

Instead, values rose for the sixth consecutive month in August, up 0.8 per cent nationally and now 4.9 per cent higher since bottoming out in February, data released today shows.

Sydney has led the recovery trend, with a rise of 8.8 per cent since prices found a floor at the start of 2023, while Brisbane has also seen values jump 6.2 percent in that time.

Cameron Kusher, director of economic research at data house PropTrack, said the “better-than-expected price growth” had reversed virtually all the declines seen in the backend of 2022.

“Property prices have increased despite rising interest rates and reduced borrowing capacities,” Mr Kusher said.

“From here, the direction of the housing market will likely be influenced by the volume of housing stock available for sale. Low volumes of new and existing properties persisted In June, but this may soon change.”

PropTrack’s newest Property Market Outlook report has forecast national home prices to be between 2 percent and 5 percent higher by the end of the year.

 

 

It is a marked turnaround on a previous prediction of a fall of between 7 percent and 10 percent, Mr Kusher said.

“Forecasts for 2024 are considerably more difficult, given the uncertainty of many factors.  At this stage, we are forecasting modest price growth in 2024.

“However, significant changes to the overall economic performance, interest rates or lending conditions, could result in vastly different price growth outcomes.”

He predicts prices nationally could be up to 3 percent higher by the end of 2024, with modest growth across most capitals, including up to 2 percent in Sydney and up to 3 percent in Melbourne.

Domain’s recently released Forecast Report is a tad more optimistic, predicting the housing market will be in a “well-established, steady recovery” by mid-next year.

“House prices in Sydney, Adelaide and Hobart will record the largest gains,” the report predicts.

 

Forecasts are for house prices in Sydney to end the current financial year up to nine per cent higher, with modest growth in Melbourne of up to two per cent and a rise in Brisbane of up to 4 percent.

“House prices in Sydney, Adelaide, Perth and the combined capitals will be at a new record high [while] Brisbane house prices will be close to a new record high,” the report predicts.

Strong population growth is set to put “greater and more immediate pressure” on housing demand, which sees an additional 300,000 dwellings needed to meet needs.

“Typically, overseas migrants rent on arrival, but, with a tight rental market Australia-wide, we may see some arrivals transition to home ownership sooner as they seek more stable housing alternatives.

“This is occurring at a time the construction industry has experienced unprecedented headwinds – skills shortages, supply chain disruptions, and soaring construction costs.”

While prices are expected to rise, affordability pressures, high interest rates and restrictive serviceability buffers will contain the pace of growth, the report reads.



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Expert tips for prospective buyers looking to purchase a home in 2024.

By Josh Bozin
Fri, Apr 12, 2024 3 min

For aspiring homeowners, be it a first-time buyer, downsizer, or investor, picturing your idea of homeownership bliss is the easy part. But before deliberating on furniture choices or scouting for that perfect neighbourhood coffee, understanding your purchasing power stands out as the most important step in ensuring your success in homeownership.

And with the Australian property market gaining momentum in 2024, there’s never been a better time to come to grips with your financial options.

In 2023, amid the changing financial landscape that saw rising interest rates and the cost of living skyrocket, among other factors, the total amount borrowed for property purchases across Australia was estimated at $300.9 billion, a 12.7 percent decrease from the previous year, according to PEXA’s latest Mortgage Insights Report.

Each mainland state also experienced a decline in new lending, according to the report, with Victoria and New South Wales seeing the biggest drops to $84.1 billion and $109.5 billion, respectively.

While this trend reflects the repercussions of such financial hardships on the everyday Australian, John Morello, director and auctioneer at Jellis Craig, said we’re seeing renewed confidence in the property market during the first quarter of 2024, particularly in Melbourne.

“Auction clearance rates have started the year strongly and consumer sentiment is rising. This lift is driven by cooling inflation and an improved outlook on interest rates. At Jellis Craig, as with the rest of the market, we are experiencing an increase in volume of property compared to the same period in March last year (up 28% in 2024),” Mr Morello said.

“Melbourne’s property market, in particular, is showing its ongoing evolution and resilience.”

PEXA’s report revealed that, while borrowing saw a decrease in 2023 in Australia, Australians still invested $613.0 billion in property purchases in 2023. In 2024, purchasing confidence is only going up, as prospective first home buyers, seasoned downsizers, and savvy investors look to capitalise on a flood of new property hitting the market, coupled with the lowering of interest rates across the board.

“With more certainty in the economic outlook, along with an increase in volume of property available, we are seeing these factors translate to early signs of a boost in confidence in both buyers and sellers,” said Mr Morello.

“Further encouraging data shows that whilst there is more property available to purchase, more people are inspecting property, again indicating that demand has increased broadly across our marketplace.”

If you’re in the market for a new property, the biggest question you must ask yourself is how much house can I afford?

A great starting place is to speak with your mortgage broker or financial professional, who can guide you on your lending options. This is critical, as you need to know what your future repayment options might look like, and ultimately, what you will typically be able to afford.

A useful tool for judging whether you can afford a specific property is to factor in the 28/36 rule — a rough guide that suggests you should not spend more than 28 percent of your gross monthly income on housing, and no more than 36 percent on all debts. Another useful tool is the idea of a debt-to-income ratio (DTI); a formula whereby an individual can divide all of their monthly debt payments by gross monthly income to arrive at a number that one can measure as a way of managing monthly mortgage payments.

Mr Morello emphasised the need to understand affordability and what’s feasible for each individual when looking to make a purchase, no matter the budget, on a property in 2024.

“It’s pivotal to work out what you can afford. Get your finances in order. Consider all associated costs with buying, and research what concessions and grants are available,” said Mr Morello.

“It’s easy for individuals to begin the process today. Start actively searching potential properties on a weekly basis, and research areas you are interested in. Check weekly sales results, attend inspections and auctions, to get a feel for the process. Just remember, it’s important to be really comfortable in understanding your living expenses, and what the ongoing expenses will be once you have bought a property.

“For example, mortgage repayments, council rates, water, power, owners corp fees, insurances, maintenance costs; if you are buying as an investment, the Land Tax payable on that property which is an ongoing tax. There’s many factors to consider.”

To see what’s possible for your specific circumstances, visit our Finance Portal for specific tools, guides and tips—as well as our own mortgage calculator—to assist you on your property journey.

 

MOST POPULAR
11 ACRES ROAD, KELLYVILLE, NSW

This stylish family home combines a classic palette and finishes with a flexible floorplan

35 North Street Windsor

Just 55 minutes from Sydney, make this your creative getaway located in the majestic Hawkesbury region.

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