property market update

Have Property Prices hit bottom? 

Something strange happened in February: despite all the doom and gloom, negative press, and one of the fastest increases in rates in living memory, property prices across the national index declined a measly 0.14%. This performance resulted from modest gains of 0.3% recorded in Sydney and a small decline of -0.4% in both Melbourne and Brisbane. Understandably, many pundits and even sections of the media are now asking if this the bottom of the cycle.  

It is a mugs’ game trying to forecast short-term movements in property prices. Whilst it is still too early to make such a statement based on one month’s data, it does appear that the worst of the property declines may be behind us.  

The counter-argument is that February results are merely the eye of the storm, given we have had yet another interest rate increase in March with potentially more to come. Also, the full impact of the nine consecutive hikes is yet to be fully felt, including 800,000 fixed rate mortgages converting back to variable rates, mostly in the second half of 2023. Finally, uncertainty abounds in the broader national and international economies.  

What we can say for certain is that the factors that we alluded to in our last market update are causing an imbalance in basic seller supply vs. buyer demand. These factors include the shortage of stock on market (circa 25% lower than the five-year average) and renewed buyer demand from both international migration and renters attempting to avoid the red-hot rental market.  

LongView’s Property Advisory team is witnessing this situation with Sales campaigns we are managing on behalf of vendors seeing groups of 20 plus at opens for inspections. Likewise, we have observed strong bidding crowds for properties that we have been actively pursuing for buyers, resulting in clearance rates now hovering around 70%.  

Separately, the rental market continues its steady upward trajectory, with Melbourne rents rising in February alone by more than 3% and more than 2% in Brisbane. There are still no signs of rent increases slowing down, as their growth in Melbourne in the last two months is stronger than at any point last year.  

The question for both buyers and vendors is whether now is the time to act. Will the early signs of stabilisation spur vendors that have been waiting out the downturn to now hit the market? And, if so, will that lead to an increase in stock and then restore the equilibrium between supply and demand, causing downward pressure on prices? 

While our advice is never based on short-term market conditions, if you are a vendor that has been sitting on the sidelines and likely need to sell this year, there is a compelling case to potentially get ahead of the curve and list soon. If you need support to analyse your options and make a confident decision, our Property Advisory team is here to help.