The property market is defiantly shrugging off the impact of higher interest rates, demonstrating a remarkable uptick of almost 5% since March. In this article, we delve into the reasons behind the surge in national housing prices.
Australia’s Housing Resurgence
Australia’s housing market is experiencing a resurgence that rivals Barbie’s comeback. Despite a 4% increase in interest rates within a year and the financial squeeze of rising living costs, home values have soared by a significant 4.9% nationwide since March 2023. This robust recovery has effectively erased roughly half of the losses recorded during the downturn spanning from April 2022 to February 2023 when home values experienced a 9.1% decline. Notably, the total estimated value of Australia’s housing market has recently breached the $10 trillion mark, a milestone not reached since June 2022.
The Driving Forces Behind Rising Home Prices
CoreLogic identifies three key drivers fueling the increase in property values:
- Net Overseas Migration: The influx of more people arriving from overseas than departing has significantly expanded the pool of individuals seeking housing.
- Use of Savings, Profits, and Equity: Home upgraders are leveraging their savings, equity, or property profits to finance their next purchase rather than taking on additional borrowing. This trend has maintained robust property demand, even amid climbing interest rates.
- Supply Constraints: The current volume of homes available for sale is notably lower compared to previous years, resulting in heightened competition among buyers and, subsequently, upward pressure on prices.
The Future of Property Prices
While home values have displayed a consistent upward trajectory over the past six months, their future course hinges on the movement of interest rates and the overall health of the economy. According to CoreLogic, we can expect some moderation in the market recovery by the close of 2023. This potential cooling of prices may be welcomed by prospective home buyers, provided it doesn’t result from further rate hikes or an economic slowdown.
Preparing for Your Next Home Purchase
In today’s climate of rapidly appreciating home values, prospective buyers can gain a competitive edge by organizing their finances and preparations before embarking on property inspections. This growing need for preparation is one of the primary reasons why 67% of Australians turn to mortgage brokers for expert guidance during the home-buying process. Helia’s research indicates that potential homebuyers seek assistance in various areas, including:
- Determining Borrowing Capacity (63% of those surveyed)
- Selecting the Right Loan (60%)
- Obtaining Pre-Approval for Home Loans (56%)
- Navigating the Loan Application Process (55%)
If you need help in any of these areas or are eager to enter the market before prices rise further, don’t hesitate to contact us today on 1800-E-LOANS to explore your home loan options.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.