How is the Market?

How is the Market?

The first quarter of this year has flown by and seen everything from an easing of Covid restrictions, to flooding and an increased cost of living, all adding pressure on the housing shortage in Queensland. An end to this shortage doesn’t look to be in the near future. The question is, how is this impacting the market now and what is ahead?

Anecdotally, we are still seeing buyers heavily outweigh available properties, so we are still in a seller’s market. The heat in the market, however, is normalising as the record prices that have been achieved over the last two years start to flatten out. A drop in prices isn’t expected but it is recommended that sellers prepare to be more realistic in their pricing this year or their time on market could be extended.

We are seeing buyers transition from the last two years of purchasing with a fear of missing out to now purchasing with a fear of buying wrong. Buyers are becoming more discerning, and it would appear the frenzy has simmered. Given the housing shortage, however, some predict another growth surge is coming.

There are so many variables that contribute to where a market is heading. Interest rate rises, inflation, tighter credit assessment and the upcoming Federal Election rhetoric are always hot talking points for those predicting a fall in the market.

One of the only forecasters to predict the Covid property boom, Simon Pressley from Propertyology, suggests a more balanced viewpoint would also consider the impact of $230 billion in household savings, $45 billion in infrastructure spending, low cost home loans, return of international tourism, wage growth, rising rental incomes, high home equity, overseas migration and an abundance of lifestyle buyers to support an overall positive influence on the property market.

Simon notes it would take five RBA rate rises just to get back to where interest rates were three years ago, which property owners comfortably serviced.

The demographic of buyers in our Noosa Hinterland region is unlikely to see a critical mass of mortgage holders who suddenly struggle when interest rates rise, thus the impact of this one factor on our market is unlikely to be profound.

Interestingly, during the 6-year cycle of interest rate increases that commenced in May 2002, the median house price more than doubled in value in over 100 individual Australian cities and towns, including 6 of our 8 capital cities, with regional locations performing best in that cycle. It was Sydney and Melbourne that experienced the softest growth during this time.

Keeping in mind the number of dwellings listed for sale is also now at an all-time record low, all indications point to a short-term flattening of prices in our local market, likely to be followed by gradual growth later this year with the potential for more rapid growth again in coming years.

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