Up, Up and Away…………….
- belindacassano
- May 29, 2024
- 2 min read
It’s no secret that housing prices have risen this year. But to what extent?
At the onset of COVID-19, it was widely predicted that the property market would experience a slump and perhaps even crash. The demographic shift of people out of the major cities due to the threat of the virus, the impact of lockdowns and relocation of workplaces to the home, led to smaller cities and regional areas driving the unexpected upswing in property prices.
As the pandemic progressed, the immediate danger was not so apparent and the capital cities, and in particular Sydney, have seen a housing recovery like no other. In fact, Sydney house prices have risen by $1,220 per day since the start of the year – 15.1%!
Yesterday the Reserve Bank of Australia left the record-low cash rate on hold. The interest rate and the forecast by the RBA that it will remain stable for the next few years has contributed to the housing frenzy. Data is showing that our economy is on track to recover from the losses due to the pandemic making it more likely that interest rates will not rise as the RBA has announced. This, along with improving economic conditions, has enhanced consumer confidence and contributed to increasing demand for property.
Advertised supply of property also remains lower than usual, creating upward pressure on prices as demand outstrips supply and buyers experience urgency from FOMO. The total number of properties up for sale, according to Tim Lawless, head of research at CoreLogic, is about 24% below its long-term average. Anecdotally, property owners wanting to move are constrained by the lack of supply and suitable property, which contributes to the vicious cycle we are in.
“Where would we go?”.
Other telling statistics are that the number of days a property remains for sale has fallen to an all-time low of less that 30 days and the median discount conceded by sellers has also reached its nadir.
Shane Oliver from AMP Capital predicts house prices could keep climbing to the order of 10-15% by the end of 2022 – for the reasons mentioned above – and start to correct from 2023 as issues such as poor affordability and tighter lending criteria take hold.
Published August 24, 2021
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