The Australian property market continues to defy global economic trends and conventional norms. In a decade when many Western economies struggled to regain their footing, Australia has demonstrated a unique resilience.
Its property market has consistently outperformed comparable markets across the Western hemisphere, showing an impressive upward trajectory that’s set to continue until at least the end of 2023. This is not to say it is guaranteed an outcome that will beat New Zealand, it’s neighbor that experienced a sharp downwards correction, although wealthy foreigners and economic opportunity seekers alike prefer Australia in large numbers – and in a post pandemic world, a fresh wave of capital could surprise Australia to the upside once more.
Strong Price Growth in Major Cities Fuels National Trend
The driving force behind Australia’s bullish property market is the strong price growth seen in its larger capital cities. The national home prices are predicted to witness a rise of around 2% to 5% by the end of this year. This forecast is fuelled by cities like Perth, Sydney, and Adelaide, which are predicted to experience the highest growth. In contrast, Hobart is expected to witness declines between 3% to 6%, and Darwin may see a contraction between 3% and 0%.
Record-Breaking Growth Amidst Stock Shortfall
Australia’s real estate sector has been on an upward trajectory, recording a staggering 34.9% growth from March 2020 to March 2022. After a slight dip of 1.9% between April 2022 and December 2022, prices rebounded, largely driven by an increase in transaction volumes and an enduring stock shortfall. This trend is expected to persist despite multiple interest rate hikes, which have affected borrowing capacities but haven’t sufficiently curtailed price growth due to the low volume of housing stock.
Housing Peaks and Troughs: A City-by-City Analysis
At present, property prices in Adelaide, Perth, and regional Western Australia are at their peak, while those in Hobart, Canberra, and Melbourne have drifted further from their top values. By year-end, it is anticipated that home prices will increase by around 2% to 5%, with predictions for 2024 remaining uncertain due to various market factors.
The 2024 Uncertainty
“The possible impact of higher repayments on these borrowers won’t be seen until 2024. At this stage, we are forecasting modest price growth in 2024,” says an industry expert, indicating that the future remains clouded with uncertainty.
Limited Supply, High Demand: The Market Dynamics
In the face of six consecutive months of property price growth, limited supply and high demand have shaped the market dynamics. A significant contributing factor to buyer competition and price growth has been the limited supply of available properties for sale. This pattern is predicted to continue, driving property prices up by as much as 5% nationally over the remainder of 2023, with higher growth rates projected for larger capital cities.
Spotlight on Refinancing in the Current Climate
Given the remarkable property price growth and potential interest rate hikes, home refinancing in Australia is now a major point of interest for borrowers. As homeowners look for the best financial solutions to manage their mortgages in the evolving market landscape, refinancing options are becoming increasingly relevant and in demand.
The Property Market Winners of 2023
The combined capital cities of Australia are expected to see a price growth of 3% to 6%. Leading the pack, Perth is predicted to witness a robust growth of 4% to 7%. Sydney and Adelaide are not far behind, with forecasts indicating price increases between 3% and 6%. Brisbane, Melbourne, and Canberra are also set to see growth, albeit on a smaller scale.
Australia’s property market’s consistent performance paints a robust picture for the rest of 2023, confirming its standing as a standout player in the global real estate landscape.