17th April 2023 / Jeremy Desmier: Market Update | 15 & 16 April 2023

The property market paused for a moment over the weekend, due to the usual slowdown over the school holidays. The REIV reported that just 445 auction results were recorded.

Whilst there were forecasts of national property prices falling 7-10% at the beginning of the year, the REA Group reports that the direction of the market would have to change significantly in the next nine months for those figures to be realised.

Property prices rose in February and March on the back of an extremely low volume of new listings coming onto the market. An ongoing lack of overall stock, coupled with demand for properties holding up much better than expected, is seeing prices rise. The relatively heightened sales activity and lack of stock hasn't afforded buyers enough scope to secure large discounts and has led to prices rising marginally over the first quarter of the year.

As we move further into quarter two of 2023, we can consider several factors that will affect the property market. First, interest rates are top of mind, with official rates increasing by 350 basis points since May 2022. Whilst the Reserve Bank has indicated it may need to increase rates again in the future, the pause in April has certainly given mortgage holders a reprieve.

We continue to see a lack of new listings coming onto the market this year, even after a low-volume spring selling season last year. It seems that uncertainty over interest rates has discouraged people from listing, however with interest rates now on hold, it's likely that we will see more homes coming onto the market. If people are considering selling, it would be best to go to market sooner, when there's less competition with other vendors and while prices have stabilised.

That lack of stock available has been a major contributor to the unexpected strength of prices seen throughout the first quarter of the year. The direction of property prices from here will likely be dependent on future interest rate movements, the amount of property available for sale, and any changes to serviceability assessment rates. Once it has become clear that interest rates are on hold, we will likely see more properties come onto the market.

Finally, in property management news, advertised rents continue to climb due to a lack of stock available for rent and very strong demand from renters. This is due to falling household sizes, few new investors entering the market, a high number of investors exiting the market, few first home buyers currently looking to enter the market, and a rapid increase in overseas arrivals to the country.

Cameron Kusher, REA Director of Economic Research, notes that it wouldn't be surprising if rental stock tightens even further over the coming months with demand likely to remain strong and supply tight.

Next weekend, auction volumes will begin increasing again as we move past the school holidays and head into the mid-Autumn selling period. If you need any real estate advise, please don't hesitate to reach out!