A Christmas rate reprieve from the Reserve Bank this month and new record highs for the country’s housing market throughout November bode well for a buoyant 2024 in real estate.
Despite a rate rise in November, national home prices climbed 0.22% month-on-month to set another fresh record, bringing them up 5.53% so far this year and 1.29% above their previous peak recorded in March 2022.
Furthermore, national home prices have now this year reclaimed 2022’s price falls in their entirety.
November marked the eleventh consecutive month of national home price growth.
After falling 4.02% from March 2022 to December 2022 national prices are now up 5.53% from the low point recorded in December 2022, to sit 1.29% above their previous peak and 5.42% above their levels a year ago.
Figures show that this year’s spring has been busier than that in 2022 with seller confidence and buyer choice improving significantly across all major capital cities.
This year, despite higher interest rates, home prices in the country have stayed strong.
Historically, in 2022, as interest rates rose home prices dropped quickly in many areas, but according to PropTrack figures, this has not been the case in 2023.
High housing demand, supported by increased migration, low rental availability, low unemployment, and recent home equity gains, has balanced out the impact of higher interest rates.
While there has been an increase in new listings in recent months, numbers are still down in comparison to the preceding 3-5 years. This, combined with lower days on market, means demand for quality listings is still far outweighing supply.
Additionally, rising construction costs and delays due to labor and materials shortages have slowed down the completion of new homes, affecting the supply of housing.
Looking ahead, although there is a risk interest rates could rise further, according to industry experts, they are close to if not already at their peak and while the outlook for the economy is weaker, population growth is set to continue rebounding strongly.
Together with the housing shortfall and continued challenging conditions in the rental market, prices are expected to continue to rise.
Rental Vacancy Rates Remain at Record Lows
The latest Domain Vacancy Rate Report for November 2023 shows that for the third consecutive month, Australia’s vacancy rate remains at a record low 0.8%.
A chronic undersupply of rental stock coupled with strong overseas migration and rising property prices against increasing demand are driving the competitive nature of the rental market, according to experts.
A number of industry figures believe that the onset of landlords selling all or parts of their property portfolios due to increasing rate pressures are also contributing to the vacancy rate figures month on month.
Australia’s rental markets are said to be in “equilibrium” when the vacancy rate is around 2%, meaning this shortage of properties for rent pushes up rental values.
Interestingly, nationally, the average views per rental listing online declined in November, indicating a slight easing of demand relative to total supply, something that is not unusual at this time of year with Christmas and the holiday period right around the corner.
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