Price growth continues to slow with interest rate hikes expected to exacerbate the slowdown.
After prices increased rapidly throughout the pandemic, the heat continues to come out of the market.
With interest rates now rising, and expected to rise much further, we are expecting price growth to continue to slow over the coming months.
However many indicators show that the market still maintains a level of strength.
The supply of properties listed for sale remains tight, with total listings 38.4% lower than the decade average. More new listings are now hitting the market each month than experienced in recent years, although a string of public holidays caused vendors to pull back in April.
Over the first four months of 2022, the number of preliminary sales was 3.6% lower than over the same period last year. Although sales volumes have eased, the number of potential buyers per listing is 9.7% higher year-on-year.
The increase in new listings has afforded buyers more options and less urgency to purchase. With an interest rate increase in May, and more rate increases expected over the coming months and years, it is likely that demand for properties will ease and we will likely start to see national property prices start to decline.
For listings, we’re moving into a seasonally slower period of the year and the Spring selling season thereafter will be the real indicator of vendors preparedness to list.
While higher rates and price falls might discourage vendors from listing, many have seen a significant increase in equity over recent years and they tend to buy and sell in the same market, so while they may not get top dollar for their property, the property they are looking to purchase will have also reduced in price.
Source: Property Market Outlook – May 2022, Cameron Kusher for Realestate.com.au