Property prices have witnessed a remarkable surge of nearly 7% within this year alone. With the continued upswing anticipated, let’s delve into the factors that are propelling national housing values to new heights and why it might be advantageous to consider entering the market sooner.
The Ongoing Price Upticks
September marked the eighth consecutive month of growth in home prices, with data from CoreLogic indicating that property values have seen a substantial increase of 6.6% since January. What’s astonishing is that prices are on the rise despite a series of interest rate hikes over the past 18 months.
What’s Fuelling the Price Surge?
The primary catalyst fuelling the surge in property prices is the scarcity of homes listed for sale. Homeowners in various cities are holding onto their properties instead of selling, intensifying the competition among prospective buyers. According to CoreLogic, cities such as Adelaide, Brisbane, and Perth have notably low levels of homes for sale, roughly 40% less than the previous 5-year averages. While there’s relatively more choice for buyers in Sydney and Melbourne, both cities are still experiencing gains in housing prices, with Sydney being particularly noteworthy.
This price escalation isn’t solely due to a shortage of available homes; record levels of net overseas migration are also contributing. In the year leading up to March 2023, net overseas migration added a staggering 454,400 people to the Australian population, equivalent to 1,245 people daily, all in search of a place to call home. According to data from the ABS, most immigrants tend to settle in Sydney and Melbourne. Consequently, despite the high interest rates, there is continued upward pressure on housing prices in Australia’s five largest capital cities (Hobart, Darwin, and Canberra, on the other hand, have witnessed a decline in house prices over the past year).
Will Property Values Continue to Rise?
At the current pace of growth, CoreLogic predicts that national housing values could achieve new record highs as early as November. Notably, homes in Perth and Adelaide have already shattered previous price records, achieving median values of $618,363 and $691,591, respectively, in September. Brisbane homes are also on track to reach record values in October, with the city’s current median home value ($761,379) only 0.6% below the previous peak.
Effects of these increases for Homebuyers
As property prices inch closer to new peaks, PropTrack asserts that the declines in prices observed last year have been completely reversed. Most data indicates that prices are unlikely to experience a significant downturn any time soon. This is attributed to the possibility that interest rates may have already reached their highest point, population growth is rebounding vigorously, and there is a shortage of new home constructions. We are already witnessing a surge in applications for home loans as more Australians recognize that the current market offers a window of opportunity to make a purchase before values rise further.
Whether you are purchasing your first home, a second property, or an investment, taking action today could prove advantageous in pre-empting future price hikes. If you have your sights set on the property market, don’t hesitate to reach out to us on 1800-E-LOANS, and we can assist you in assessing your borrowing capacity in the current economic climate, even securing pre-approval so that you are well-prepared to seize opportunities when they arise.
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