New report shows national property market increase to continue

 

National property prices are expected to increase between 2 and 5 per cent by the end of 2023, according to PropTrack’s Property Market Outlook August 2023 Report.

The report analyses consumer behaviour by extracting property market data from the 12.1 million Australians who visit realestate.com.au each month.

It comes following a 2.3 per cent increase in property prices over the first six months of the 2023 calendar year.

“The property market has seen a turnaround this year with six consecutive months of property price growth,” PropTrack director of economic research Cameron Kusher said.

The property market this year has showed resilience in the face of rising interest rates and relatively low wages growth.

Dwelling price forecasts for 2023-24

The report suggested a lack of supply of available properties for sale was a key factor contributing to buyer competition and price growth.

“We expect property prices to increase by up to 5 per cent nationally over the remainder of 2023, with greater growth projected in the larger capital cities,” he said.

Earlier this week CoreLogic reported the national average home price rose 0.7 per cent in July.

Houses in Brisbane and Adelaide saw the strongest gains.

The report from PropTrack notes prices are forecast to increase between 3 and 6 per cent, on an annual basis, across the combined capital cities.

All capital cities except Hobart (-3 to -6 per cent) and Darwin (-3 to 0 per cent) are expected to see positive price growth over the remainder of 2023.

The strongest growth is expected in Perth (4 to 7 per cent), Sydney and Adelaide (both 3 to 6 per cent), and Brisbane (1 to 4 per cent).

Melbourne (-1 to 2 per cent) and Canberra (0 to 3 per cent) are forecast to see growth this year.

However, Mr Kusher concedes forecasting the direction of the property market beyond 2023 has proved challenging.

“The outlook for 2024 is much less clear, with a large cohort of fixed-rate borrowers’ mortgages set to expire from current interest rates of around 2 per cent and reset to around 6 per cent,” Mr Kusher said.

“Interest rate changes act with a lag and, as such, the possible impact of higher repayments on these borrowers won’t be seen until 2024.

“At this stage, we are forecasting modest price growth in 2024.”

Unemployment uncertainty

Economist Rae Dufty-Jones from RPS Group says the key risk to the property market rests in the unemployment rate.

“Unemployment is the biggest risk to the housing market crashing because people will find a way to paying off housing with a job, but this becomes impossible without an income.”

Official forecasts have the unemployment rate rising above 4 per cent, but to date the jobs market has also proved resilient.

“Conditions in the labour market remain very tight, although they have eased a little,” RBA governor Philip Lowe noted earlier this week.

“Job vacancies and advertisements are still at very high levels, although firms report that labour shortages have lessened.

“With the economy and employment forecast to grow below trend, the unemployment rate is expected to rise gradually from its current rate of 3.5 per cent to around 4.5 per cent late next year.”

The report talks about the need for a supply-side response to improve affordability.

Ms Dufty-Jones says she agrees, “but I would qualify it as a supply-side response informed by serious structural fiscal and monetary policy reform”.

Source : ABCNews