We’ve weathered quite the real estate storm over the past few months, but according to a report from Domain good things are on the horizon for Brisbane and four other capital cities. Before we get to their reasons for this, let’s take a look at property cycles, and where we are potentially sitting in the current one.
Property Cycle Explained
The property cycle is the phases that property prices go through over time. According to Dr Nicola Powell (Domain’s chief of economics and research), “a property cycle starts with a boom, when prices and demand are high amid limited supply.” This is exactly what we saw during the pandemic, when a mix of low interest rates, returning residents and FOMO caused property prices across the country to jump by 24.6% between 2020 and 2022.
After the boom, comes a bit of a downturn. Prices soften, the giddying highs go through a slight return to reality. Supply levels return to normal or maybe, as we’ve seen, increasing interest rates lead to diminished borrowing capacity and a bit of trepidation amongst homeowners.
Generally in Australia the boom isn’t followed by a massive bust. After the softening in the time following the boom, the property cycle rallies and starts to move upwards again. The contraction ends and recovery begins.
This is the period of the cycle we’re finding ourselves at now. Investors and buyers are coming back into the market, and the foundation could be being laid for another upsurge.
Will Brisbane See Record Highs This Year?
What does this platform mean for the year ahead of us? Domain forecasting indicates “the once cooling Aussie property market will reignite again to record high prices in five capital cities over the next 12 months.”
With unplanned migration set to play a big factor in placing population pressure on the housing industry, and a scarcity of stock on the market compounding the issue, Brisbane and four other capitals are looking at a resurgence that could take them to higher highs.
According to their forecasting, by the end of June 2024 house prices in Brisbane will have gone up between 1 and 4%, while unit prices will have gone up by up to 1%. Along with the price rises we’ve already experienced here, if we see these percentages the Brisbane median will be at a record level.
Sydney, Melbourne, Perth and Adelaide will also see similar results if the Domain forecasting holds true.
What’s Happening with Interest Rates?
12 interest rate hikes in a row have seen mortgage repayments soar to massive highs. We’re definitely closer to the end of these increases than we are to the start, although there might be a couple more in the pipeline. This has created a housing affordability crisis, with “the proportion of income needed to meet average loan repayments across Australia increasing to 44.9%”.
Despite these rate rises, buyers are still out in force across Australia, with PropTrack reporting a 7% increase in the year leading to May 2023. This is keeping the property market buoyant, with prices rising nationally for a fifth consecutive month as of May this year.
Sellers can be reassured that the buyers are out there should they need to transact within this market.
Choosing the Right Real Estate Agent
Whatever the market conditions, if you wish to get the right price for your property, you need to use the right real estate agent. An experienced, well-connected real estate agent with a formidable network of contacts will give your property traction and put it in front of as many buyers as possible.
Henry Wong is a master networker, and during his years in the industry he’s built up a portfolio of close contacts that extends from Australia and into Asia. He would love to leverage the power of his contacts to get your property sold at the price you deserve! Get in touch with him and his team today.
