{"id":1426,"date":"2024-04-23T19:11:24","date_gmt":"2024-04-23T09:11:24","guid":{"rendered":"https:\/\/www.nfg.com.au\/property-price-rebound\/"},"modified":"2024-04-23T19:11:24","modified_gmt":"2024-04-23T09:11:24","slug":"property-price-rebound","status":"publish","type":"post","link":"https:\/\/www.nfg.com.au\/property-price-rebound\/","title":{"rendered":"Property price rebound"},"content":{"rendered":"

As Australia navigates through economic uncertainties and higher borrowing costs, the real estate market continues to exhibit a surprising resilience. According to recent analyses<\/a>, Perth is expected to see house price increases of up to 16% this year, with Adelaide and Brisbane also forecasting substantial growth. This buoyancy is attributed to a strong demand for housing in these more affordable cities, which is currently outpacing the supply.<\/p>\n

National Trends and Local Dynamics<\/h3>\n

Nationally, the housing market is anticipated to grow by an average of 5% despite the tougher lending environment imposed by the Reserve Bank’s tight monetary policy to combat persistent inflation. In contrast, the more saturated markets of Sydney and Melbourne show a more tempered growth expectation, ranging from flat to 9% gains.<\/p>\n

Perth’s market is particularly robust, driven by significant migration and affordability compared to other capitals. The limited availability of new housing has spurred this growth, with the most substantial price increases occurring in both the premium and more economically accessible suburbs. According to Nerida Conisbee, Chief Economist at Ray White, the cost to build new homes in these areas has risen sharply, further tightening the market.<\/p>\n

Economic Influences and Market Drivers<\/h3>\n

The resilience of the housing market is partly due to the changing profile of buyers. Higher quality borrowers, who typically engage in transactions with lower loan-to-value and debt-to-income ratios, are becoming more prevalent. These buyers are capitalizing on a market where overall listings remain below the five-year average, especially noted in cities like Brisbane.<\/p>\n

Another factor contributing to the market\u2019s strength is the significant equity gains accrued by existing homeowners over recent years, which have allowed them to upgrade their homes despite higher interest rates. This shift in purchasing activity continues to support the housing market’s resilience, as explained by Eleanor Creagh<\/a>, a senior economist at PropTrack.<\/p>\n

The Challenges Ahead: Affordability and Supply Shortfalls<\/h3>\n

Despite the optimistic projections, challenges remain, particularly regarding housing affordability and supply constraints. Domain\u2019s research head, Nicola Powell, suggests that while Sydney might see price gains between 7% and 9%, the overarching issue of affordability will likely temper the pace of growth until borrowing conditions improve.<\/p>\n

Affordability concerns are increasingly becoming a barrier, especially in Sydney, where they significantly constrain potential price increases among middle to lower-income buyers, as noted by Jarden senior economist Carlos Cacho. Furthermore, predictions by Maree Kilroy of Oxford Economics suggest a slowing momentum in price growth by mid-2024, albeit temporarily.<\/p>\n

Potential Risks and Long-Term Outlook<\/h3>\n

The potential for increased mortgage arrears and distressed selling is rising, as highlighted by Fitch Ratings and economic experts from SQM Research and AMP. The combination of high rates and reduced household savings buffers could lead to more homeowners facing financial difficulties, particularly if the job market slows and discretionary spending cuts reach their limits.<\/p>\n

Conclusion<\/h3>\n

Overall, while the Australian housing market continues to perform robustly against a backdrop of economic challenges, the growth trajectory is fraught with potential hurdles that could impact the long-term market stability. Homebuyers and investors must navigate these complexities carefully, possibly with the aid of professionals like mortgage brokers who can provide expert guidance in leveraging current market conditions to secure favourable outcomes.<\/p>\n

Source: AFR<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

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