In a remarkable turnaround, Australia’s property market is rapidly approaching a complete recovery from the downturn, according to Domain.
Domain’s house price report for the September quarter found the median house price across the combined capitals was $2,000 away from reaching the peak levels seen during the pandemic boom. Meanwhile, unit prices were only $5,000 from setting a new record.
Domain chief of research and economics Nicola Powell said that every capital city was now in a state of recovery, led by Sydney and Brisbane.
“By the end of the calendar year, house prices in Sydney and Brisbane are anticipated to recover fully from the 2022 downturn, reaching new records,” she said.
This comeback is particularly impressive when you consider that Sydney’s median house price lost more than $148,000 value during the 2022 downturn. But after regaining $135,705 of that in just nine months, very little of the deficit remains.
As the table below shows, Brisbane’s recovery story is similar, with a bounce back of $39,020 from a $47,381 loss.
Ms Powell said the markets’ recovery was being driven by four factors:
“It is worth pointing out that the pace of growth is currently being somewhat contained by the stretched affordability,” she said.
“If mortgage rates weren’t as high as they currently are, price growth would be faster with the current housing undersupply. So for buyers who are in the position of considering purchasing, it is important to weigh up the pros and cons of delaying their purchasing timing along with financial planning.”
Ms Powell noted that rising listing volumes were also contributing to this moderation.
“During the last quarter, choice has also risen for buyers, as sellers regain market confidence and pent-up supply makes its mark. September’s auction volumes reached a 16-month high and the total national supply is now 5.1% above July’s low (6.5% higher across the combined capitals) with new listings in Sydney, Melbourne, Canberra and Hobart are higher annually,” she said.
The increase in supply gives buyers more choice and time to deliberate, easing some of the urgency that previously characterised the market.
When will interest rates go down?
The Reserve Bank of Australia (RBA) has been increasing the country’s official interest rate in a bid to get inflation back to its target range of 2 to 3% (it’s currently 5.4%).
This, in turn, has made servicing a variable-rate home loan more expensive while also reducing borrowing capacity.
But in good news for Australians, all four major banks are in agreement that the RBA will start cutting the cash rate next year, forecasting:
If these rate cuts go ahead as anticipated, they will likely add more fuel to the market’s recovery.
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