Property market update: Australian property market is working in reverse

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, updated on August 4th, 2023       

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Property update

The Australian property market has experienced some reversal in housing market conditions that have seen a decrease in borrowing from investors wanting to purchasing property. However, there are still pockets of surprises that are seeing values rise in certain parts of the property market.

Dwelling values continue to trend low

Dwelling values have been on a gradual decrease in the past few months. However, settled transaction are at their lowest, which according to CoreLogic have last peaked in 2015. The national number for settled houses and unit sales over the past 12 months to May 2018 was 465,788. The annual number of settled sales trended lower at -7.7%. The Australian Bureau of Statistics also revealed that the trend estimates of the value of total building work done were up by 0.6% in the March quarter, resulting in the seasonally adjusted estimate to be at the value of $28,584 million in the March quarter. The trend in total dwellings also appears to be holding steady with an increase of 1.2% in the March quarter from a 1.8% in December last year.

Despite the steady rise, the market in capital cities has been showing an overall week performance when compared to the previous years.

Lack of lending from investors has a domino effect

The housing market is currently experiencing a lot of pressure from the withdrawal of both offshore and local investors. The implementation of new taxes in many of the capital cities has seen investors being cautious when it comes to investing. According to Real Estate, the slow commencement on the building of new buildings for investors to invest in has also played a part.

This has had a domino effect when it came to borrowing intentions. The annual housing credit growth has slowed down from 6.6% in the 2016-17 fiscal year to 5,8% over the past twelve months ending in May 2018. With investors also reluctant to invest this has caused a slowdown, causing the annual rate of growth to fall to a historic low of 5.1% from the previous year to 2.0%.

The see-saw effect between houses and apartments

Despite the recent activity that has been taking place in the property market for the past few months, buying intentions remain steady. The national demand for property has experienced a 5.2% year-on-year increase.

Most Australians are most likely to finance their house or apartment with a home loan. House and apartment sales constantly play out in a see-saw manner depending in which state or region you are in. The median house price also determines whether a house or an apartment will be suitable for most Australians. This also effect the type of home loan that they apply for.

Nationally houses still out perform apartments with a 7.8% year-on-year increase, while apartments have experienced a drop of 1.2%. Due to the rise of high property prices and falling values, housing demand in capital cities like Melbourne have dropped and apartments are continuing to see high levels of demands.

How the property market is going to play out in the next months is yet to be known, but you can always try to stay ahead by keeping informed and prepared. If you are especially in the market looking to climb the rungs of the property ladder it is best to be prepared with a pre-approved home loan that comes at a competitive rate.

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