After two years of uneven momentum across Australia’s property market, we’re now seeing a significant rebalancing that is presenting new opportunities for buyers.
The latest data shows that the hottest markets are starting to lose steam as affordability constraints bite, while weaker markets are beginning to strengthen as the value on offer becomes clearer and more enticing, and interest rate cuts enable more buyers to get finance and enter the market.
According to Cotality (previously CoreLogic), price growth is moderating in what have been the hottest markets over the past two years – Queensland, South Australia and Western Australia.
Buyers in Brisbane, Adelaide and Perth are still active, but competition is not as fierce. Price growth remains positive but it’s slowing.
Over the past three months, home values in these cities have risen by 1.6%, 1.3% and 1.6%, respectively, compared to 3.9%, 4.3% and 6.1% over the same three-month period last year.
Regional parts of Queensland and Western Australia are following suit. Strong markets that have experienced double-digit annual price growth, like Mackay, Gladstone, Townsville and Toowoomba in Queensland, as well as Geraldton and Bunbury in Western Australia, are starting to show signs of moderation as buyers hit their affordability limits.
Slower price growth means FOMO (fear of missing out) will fade and buyers will be in a stronger position to negotiate a sale, or secure a property at auction without intense bidding pressure.
They will also have a better chance of keeping their savings growing at a similar pace to home values so they have enough for the deposit when they find the right home.
At the other end of the spectrum, prices are starting to rise again in the markets that have lagged over the past two years, namely Victoria and Tasmania.
Home values in Melbourne and Hobart have risen by 1.2% and 0.9%, respectively, over the past three months compared to a 0.2% fall in Melbourne and a 0.3% gain in Hobart at the same time last year.
Regional towns in Victoria are also following the trend. Home values in Geelong, Ballarat and Warrnambool have fallen over the past year but are now flattening or rising slightly – often the first sign of a bottoming market. In Tasmania, regional markets like Launceston and Devonport have recorded very little price growth over the past year and offer great value buying today.
The opportunity for buyers in these markets is to purchase a home or investment property early in the new growth cycle to catch as much of the upside as they can.
NSW and the ACT have sat in the middle of the national market over the past year. Sydney home values are up by just 1.1% over 12 months, regional NSW is up 3.3% and Canberra is down 0.7%.
Whether you’re hunting for value in a previously hot market or planning to buy in a stable or recovering one, now is a great time to act – before the expected rate cuts later potentially accelerate property price growth.
By John McGrath, Chief Executive Officer of McGrath Estate Agents.
