Franzen Tips #1167: Downturn? What Downturn!

Once again, our amazing property market is defying history and has bounced back from its recent “correction” much faster than anyone really expected. This is despite the fact that the full impact of the Reserve Bank’s interest rate hikes hasn’t taken full effect in the community yet.

In its latest report, Corelogic‘s national Home Value Index (HVI) recorded a 0.8% rise in September which is the eighth consecutive month of growth. This follows a 0.7% rise in August. Interestingly, the quarterly growth has eased slightly as a result of more properties now coming onto the market as vendors are feeling more comfortable in achieving the prices that they want/need for their properties.

Should this growth momentum be maintained in the coming months, CoreLogic expects its HVI to hit a new nominal high at the end of next month which would mean the downturn has been completely wiped out by the recent month’s growth.

In Sydney and Melbourne, two of Australia’s most expensive markets, the middle sector of the market is beginning to experience high growth, with Corelogic’s Mr Lawless predicting we are possibly “starting to see renewed affordability challenges deflecting more demand towards the middle of the market where barriers to entry are lower”.

As is normally the case we are seeing the regional areas, such as ours, lag slightly behind the trends in the capital cities but nonetheless still heading in the same direction. Corelogichave found the regions reporting weaker growth conditions relative to their metropolitan counterparts in September, with regional Australia showing a 1.1% increase over the September quarter, as opposed to the 2.5% growth seen in the nation’s capital cities during that period. “Softer housing conditions across regional Australia looks to be more demand-driven, with the estimated number of home sales 6.5% lower than a year ago and 9.2% lower relative to the previous five-year average,” Mr Lawless explained.

PropTrack’s Home Price Index shows similar results with their senior economist Eleanor Creagh saying that with interest rates likely at their peak and population growth ticking along nicely, she believes these factors, paired with a lull in new home builds, should see prices rise. “As we head further into spring, more markets are likely to reclaim 2022’s fast falls to set new peaks,” she concluded.