Conditions in the property market are always changing, being influenced by economic, political, and geographic factors that affect homeowners, buyers and sellers alike. In the last few years, those conditions have changed faster and to a greater degree than we’ve seen in Australia for decades. After more than ten years of rising demand, rising prices and low mortgage rates creating a flourishing ‘seller’s market’, this winter, things look to be changing. In our latest property market update: what’s going on in the property market in winter 2022, and what does it mean for buyers and sellers?
Market conditions cooling down for winter
While market activity remains strong in Australia’s smaller capitals – Brisbane, Adelaide, Perth – it is slowing down. This is in line with larger markets like Sydney and Melbourne, which have had falling prices since the start of the pandemic.
House prices are decreasing for a few reasons. Firstly, they were already at an exceptional high. For the last 10 years, federal and state policies have been in place to support homeowners and buyers with low cash rates and buyer assistance schemes.
Secondly, with population growth already pushing demand up and supply down, a low cash rate meant more people – particularly first home buyers – were able to take on a mortgage and buy a home. This triggered a rise in demand, which drove prices up further and ultimately decreased affordability.
Property market update: Signs of a slow-down
Conditions changed in May this year when the Reserve Bank of Australia (RBA) raised the cash rate for the first time since 2010, then raised it again in June. This means that mortgage repayments will be higher, and borrowing to buy is more difficult and expensive. The natural result is putting the brakes on rising house prices.
And the data is showing it. According to Realestate.com.au, national search volumes for properties both for sale and for rent are 10% lower than this time last year. The volume of enquiries sent to real estate agents has also fallen, sitting around 4% lower than this time last year.
In its own property market update, real estate platform also reported that weekly sales volumes this year are 7% lower than over the same period last year.
After climbing over $1,000 a day throughout 2021, the median house price in Sydney – the highest in Australia – has finally started to fall, sitting 1.4% lower than it was at the start of 2022.
With the market slowing down, properties aren’t selling as quickly, either. The median number of days listed on realestate.com.au for properties around Australia during May was 39 days, up from 35 in April.
Regional migration is also influencing house prices in the capitals, with city workers seeking a tree change and moving to the regions.
Though it’s too early to tell what the next few years will look like, economists and real estate experts expect that prices will continue to fall. As the cost of living rises and people pinch pennies to make ends meet, market activity – and buyer interest – will take a hit.
Want to learn more about the real estate market? Check out our article Australia’s Fastest Rental Growth Suburbs