According to the media, the Australian property market is looking pretty bleak at the moment. A quick online search will return headlines like “Downturn expected to hit double digits” and “Price falls to continue”, with words like “plunge” and “plummet” thrown around everywhere you look.
Is it really all doom and gloom for housing in Australia? I say no – and here’s why.
Good property market news for the New Year
At the end of 2022, three pieces of news indicate a positive market for investors:
The RBA rate rise was smaller than in previous months
The Reserve Bank of Australia (RBA) had its monthly meeting and the board decided to raise interest rates by 0.25 percentage points. This is generally considered a ‘standard’ rate rise and is what we often see under ‘normal’ circumstances. This rate rise marked the second month in a row where interest rates went up by 0.25 percentage points, in stark contrast to the 0.5 percentage point raises of the previous few months.
In the commentary accompanying this announcement, the RBA stated: “A further increase in inflation is expected over the months ahead, with inflation now forecast to peak at around 8 per cent later this year. Inflation is then expected to decline next year due to the ongoing resolution of global supply-side problems, recent declines in some commodity prices, and slower growth in demand.”
This news should allay the common fear that interest rates are going to keep rising and rising – it is clear the RBA feels a turnaround can be expected soon. This is great news for current investors, and those interested in getting into the property market. Interest rate pain is set to decrease for borrowers and landlords, which should create positive sentiment in the market.
Property tracking showed the declines in housing prices are stabilising
PropTrack, one of the large companies that track property prices across Australia, reported that the declines in property prices seen across most capital cities in recent months is stabilising.
The report showed that the decline in property prices in Brisbane was minute during October, around 0.09%. They pointed to the resilient property prices in Perth, which during the same month actually increased slightly. Melbourne and Sydney, which have seen some of the largest declines, also showed signs of slowing down.
What does this all mean? There’s a very good saying that I always return to: things are never as bad as they seem, nor are they as good as they seem. In this case, where everyone has painted a bleak picture, I think it’s fair to say the economy is not as bad a shape as people have painted it to be.
Interest rate rises are slowing down, property prices are stabilising, and confidence in the market should rise accordingly.
Rental properties continue to be lucrative
The third piece of good news for investors is that rental prices continue to rise across Australia.
“Australia’s rental market has spent the last month tightening up, and the current vacancy rate is still what experts term ‘extremely low’ across the country. More and more people are renting for longer at a time when advertised listings for rent have plummeted, causing rents to shoot up at some of the fastest rates in decades,” stated rent.com.au
These three things together are very positive if you’re trying to get your foot in the market as a new investor. The market is stabilising, interest rates are stabilising, and rents are continuing to rise, making it a great time to enter the property market.
If you’d like to find out how you can take advantage of these three positive market indicators, I can give you the unbiased advice you need.
