After a year of massive growth in the Australian Property Market, a 23.7% increase across Australia according to the ABS December 2021 House Price Index, it is no surprise to see growth rates slow down.
This doesn’t mean risk is entering the market, as we aren’t seeing signs of significant price reductions, but it will be welcome relief for those still trying to enter the market.
A key reason for this is that sellers who have been procrastinating as to when to sell their properties are now listing them for sale in the fear they may have missed the peak of the property cycle. Ironically it was their decision not to sell that helped fuel rapid growth as lack of supply combined with strong demand pushes prices up.
So what we are seeing is a normalisation of the markets, especially in Sydney. We are likely to see the continued strong activity and sale prices in Sydney be a continuing stimulus to other States where interstate migration is on the increase.
What we are experiencing is normal cycles, which we have talked about for years and show strong consistency in Australia.
What does concern me is that we have had this strong growth in a period of time where little or no real migration has occurred. Now that the borders are open, the incoming migration will provide the stability and perhaps even further stimulate the property market in the coming years.
Hence, I remain very confident of a stable market due to the underlying fundamentals which include:
- Continued limited supply;
- Stable demand with potential for demand spike with lift in migration;
- Increasing construction costs and build delays;
- Low interest rate environment even with allowance for a few rate rises in the near future;
- Sensible lending practices including provision for higher repayment costs;
- Low rental vacancy;
- Owner Occupier rate to continue to lift with Government support in the First Home Buyer sector.
