Market Update: Diverse Conditions Create Market Complexities

By Ellen Blundy | May 2024

Market Update: Diverse Conditions Create Market Complexities

We are currently observing a range of market conditions that are creating complexities for both buyers and sellers. The national housing market is experiencing a slowdown in growth due to inflationary pressures and a high-interest-rate environment. However, it’s essential to recognise that the market doesn’t move uniformly, and different dynamics are at play across various regions.

Different Markets, Different Moves..

According to Owen, a spokesperson from Macquarie Bank, cities like Perth, Adelaide, and Brisbane are currently leading in terms of growth. “Perth home values, for example, were up 6% in the three months to April, compared to Melbourne, which was flat,” he noted. In constrained markets, many potential sellers have limited options for relocation, causing a market deadlock.

Conversely, not all markets are experiencing such growth. Since the rate hikes began, Melbourne house values have decreased by 4.2%, while Hobart has seen a sharper decline of 11.2%.

Strong Migration Keeps the Rental Market Tight:

Australia’s record net migration in 2023 has significantly impacted the rental market, with median weekly rents reaching a historic high of $627 per week in April 2024. The federal government, following a review of overseas migration, aims to reduce migration numbers to sustainable levels. The 2024-25 Budget announcement forecasts a drop in migration levels to 255,000 by 2025-26.

In Summary:

The housing market has softened in the first half of the year due to inflationary and affordability pressures. Despite these challenges, constrained supply and other factors suggest the property market is unlikely to see a prolonged downturn. Price growth may continue to soften, particularly as a cash rate cut is not anticipated until late this year or early next, contingent on key economic indicators like inflation.

On a Local Front:

In our local market, conditions are varied. Desirable homes in prime areas continue to be in demand and achieve favorable outcomes quickly. For example, properties in Berwick South, benefiting from popular school zoning, have short days on market. However, as landlords exit the investor market, particularly in sectors dominated by townhouses and units, we are seeing an oversupply and softening prices in this segment.

Lifestyle acreage properties are entering a quieter season, maintaining stable prices due to limited stock. Premium properties are experiencing longer days on market and fewer buyers. Nonetheless, we anticipate a boost in market confidence with the arrival of Spring.

For more insights and personalised advice, contact our team at Peake Real Estate. We’re here to navigate these complex conditions with you.