Rapidly rising interest rates and gloomy predictions of sharp property price falls from some have sparked widespread uncertainty in housing markets this year, but there are signs that the fear is fading.
Experts say months of talk about the impact of interest rate hikes and negative headlines about what have been relatively modest home price declines have understandably prompted would-be buyers to sit on their hands.
Each Saturday across the country, a high number of sellers are continuing to take their properties to auction despite bubbling uncertainty in the market.
And each weekend, broadly speaking, good levels of buyers are out in force and snapping up quality homes, with the ‘clearance rate’ – the percentage of successful sales under the hammer – providing an indicator of market stability.
Clearance rates remain healthy.
Colin Lee, chief executive officer of Inspire Realty, said auction clearance rates across the board remain healthy.
“The national auction clearance rate dipped as we came out of 2021 and was at its lowest in August 2022,” Mr Lee said.
“Now, in October, they’re up by about 4% to 5%. While still low, it’s a clear indication the market is returning to stability.”
Earlier this year, some real estate pundits and economists predicted property values would slump by 15% across the course of 2022.
The latest PropTrack Home Price Index shows values nationally are just 3.4% down from their peak, with a modest 0.9% decline recorded in the month of September. Sydney property prices have fallen 3.7%, with Melbourne home prices down 2.1%.
“Despite recent falls, prices are still significantly above their pre-pandemic levels,” Paul Ryan, senior economist at PropTrack, said. “Regional areas remain up almost 50% since March 2020. Capital city prices are up 25% over the same time period.”
And the pace of price falls has slowed “significantly”, Mr Ryan noted.
Part of the government’s response to Australia’s crippling skills shortage is a significant increase to the annual permanent migration cap to 195,000 people.
That flood of new people into the country will coincide with an imminent rebound in the international student market, with visa applications surging in recent months.
Mr Lee said the arrival of hundreds of thousands of people in the next year alone will mark the largest permanent and temporary migrant intake on record.
“And it’s happening in the midst of a housing shortage,” he said.
“Given the average household is about 2.2 persons, the arrival of 230,000 people in the next year equates to a need for an additional 105,000 properties. Nationwide, we only have 80,000 properties currently available for rent.
“Rental vacancy rates are under 1% nationally, while rent prices are booming. Across many population centres, rents are up 10% to 15% since the start of the year.
“In short, Australia is massively undersupplied when it comes to rental properties and we’re about to see demand explode due to migration. This can only lead to increasing property values as we head into 2023.”