(May 2023 Blog) Why Australia’s Property Markets Are Currently Performing Better Than Anyone Expected

Defying market expectations that Australian property prices would fall steeply this year as higher interest rates bite, CoreLogic’s national home value index posted a 0.6% monthly gain in March.

Sydney, Melbourne, and Perth saw the most significant growth over the month with values up 1.4%, 0.6% and 0.5%, respectively.

And while Hobart (-0.9%), Canberra (-0.5%) and Darwin (-0.4%) saw property prices fall, the pace of decline is easing, raising hopes that the market has hit a floor far earlier than anyone thought possible, despite ten consecutive interest rate rises from the Reserve Bank.

What’s going on?

Well, this is a prime example that property prices are driven by more than just interest rates, with Tim Lawless, CoreLogic’s research director, putting the rise down to three combining factors:

●       Low advertised stock levels: Capital city listing numbers ended March almost 20% below the previous five-year average, according to CoreLogic.

●       Extremely tight rental conditions: Asking rents have soared to historical highs as vacancy rates have plunged to record lows, according to Domain’s rental report for the March quarter.

●       Additional demand from overseas migration: Australia gained more than 300,000 people in the 12 months to September 2022 from net overseas migration, according to the Australian Bureau of Statistics.

“With rental markets this tight, it’s likely we are seeing some spillover from renting into purchasing, although, with mortgage rates so high, not everyone who wants to buy will be able to qualify for a loan.  Similarly, with net overseas migration at record levels and rising, there is a chance more permanent or long-term migrants who can afford to, will skip the rental phase and fast track a home purchase simply because they can’t find rental accommodation,” Mr Lawless said.

While it’s too early to tell if the market has bottomed out, keep in mind that Australian property remains a sound investment, regardless of market cycles, with national values rising 382% over the 30 years to July 2022, according to CoreLogic.

This historical track record of growth is why successful property investors reap the rewards when they take a long-term view,

Looking to buy a quality investment property? As an expert buyer’s agent, A Game Property Advisory can help you secure a quality property at a good price. Get in touch with Jim by calling 0422 446 170 or emailing jim@agameadvisory.com.au.