{"id":2577,"date":"2022-05-17T07:44:13","date_gmt":"2022-05-17T07:44:13","guid":{"rendered":"https:\/\/royabhishek.in\/urbanbuyer\/australias-property-market-shows-signs-of-easing\/"},"modified":"2022-05-17T07:44:13","modified_gmt":"2022-05-17T07:44:13","slug":"australias-property-market-shows-signs-of-easing","status":"publish","type":"post","link":"https:\/\/royabhishek.in\/urbanbuyer\/australias-property-market-shows-signs-of-easing\/","title":{"rendered":"Australia\u2019s property market shows signs of easing"},"content":{"rendered":"

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Key takeaways<\/p>\n

Australia\u2019s property market has shown signs of easing as the current cycle of strong growth slows down.<\/p>\n

Australia-wide, sales volumes in April 2022 were 15% lower year-on-year.<\/p>\n

Buyers are still out there but it\u2019s time for sellers to reset their price expectations and be mindful that properties may take longer to sell with fewer competing bidders.<\/p>\n

The smaller capitals are still benefiting from preference shifts toward larger homes.<\/p>\n<\/div>\n<\/div>\n

Australia\u2019s property market<\/a><\/u> has shown signs of easing as the current cycle of strong growth and heightened buy demand begins to wind down, according to the latest PropTrack Housing Market Indicators<\/a><\/u> report.<\/strong><\/p>\n

Easter and Anzac’s long weekends, combined with the ongoing federal election<\/a><\/u> campaign and the threat of interest rate rises in April disrupted the housing market nationwide.<\/p>\n

The report shows that demand<\/a><\/u> from prospective buyers continues to come back from the extreme levels witnessed in 2021, as expectations of price falls dampen property buying activity.<\/p>\n

\"Mortgage\"<\/p>\n

And many experts expect mortgage rates to continue climbing further as the Reserve Bank<\/a><\/u> embarks on an earlier and more compressed tightening cycle than was previously anticipated.<\/p>\n

Meanwhile, regional areas<\/a><\/u> continue to see a constrained stock of available properties for sale, while demand per listing remains high, which is supporting price growth in these markets.<\/p>\n

And when it comes to the capital cities, Sydney<\/a><\/u>, Melbourne, and Hobart are seeing activity cool more quickly than Adelaide and Brisbane.<\/p>\n

In fact, the smaller capitals are still benefiting from preference shifts toward larger homes, as well as affordability advantages and workplace flexibility.<\/p>\n

Brisbane is now also seeing momentum decelerate, having been a stronghold this year, the report shows.<\/p>\n

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\u201cLast year was a seller\u2019s market and overwhelmingly so, while this year\u2019s continued strength in new listings has seen a lot more choice for buyers,\u201d <\/em>Eleanor Creagh<\/a><\/u>, senior economist at REA Group and author of the report, said.<\/p>\n

\u201cThis has brought a much more healthy balance to the market as dynamics shift in favour of buyers, with competition easing and days on-site climbing as a result.\u201d<\/em><\/p>\n<\/blockquote>\n

Here\u2019s a closer look at the key trends.<\/p>\n

Sales volumes dip<\/span><\/h2>\n

\"04\"<\/p>\n

The data suggests the pandemic property boom is subsiding.<\/p>\n

Australia-wide, sales volumes in April 2022 were 15% lower year-on-year.<\/p>\n

In every state and territory except WA and the ACT, sales volumes have slipped when comparing April this year with last, with the largest declines in NSW<\/a><\/u> (down 24.5%), Tasmania (down 22.0%), and Victoria<\/a><\/u> (down 18.5%), owing to slowed demand.<\/p>\n

But in WA and the ACT, sales volumes are higher year on year by 5.6%, and 9.1% respectively, likely due to the fact stock volumes are still low and properties are being snapped up quickly.<\/p>\n

And Creagh expects that sales volumes will continue to slow as reduced mortgagee affordability weighs on buyer demand \u2013 particularly as we enter the seasonally quiet winter months.<\/p>\n

Search volumes drop<\/span><\/h2>\n

\"05\"<\/p>\n

The data confirms that search activity slowed again in April 2022, with national search volumes falling 2% from March.<\/p>\n

Search activity is easing Australia-wide, and volumes fell in every state over the past month with the largest month-on-month declines recorded in WA (-7%) and NSW (-6%).<\/p>\n

Compared to the same period a year earlier, search volumes are lower in NSW (-10%), the ACT (-9%), and Vic (-9%) but remain higher in WA (10%), SA (7%), the NT (6%), Queensland (3%), and Tasmania (1%).<\/p>\n

What\u2019s next for Australia\u2019s property market?<\/span><\/h2>\n

Is this merely a long weekend and pre-election hiatus, or a sign of things to come?<\/p>\n

Rising mortgage rates, affordability constraints, an increase in the number of properties for sale, and the expectations of more rate hikes have all seen the housing market rebalance significantly since last year.<\/p>\n

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\u201cIt’s likely that activity will continue to slow as we enter not only a seasonally quieter winter period but also as household budgets are squeezed and mortgage affordability worsens,\u201d <\/em>Creagh said.<\/p>\n<\/blockquote>\n

She added that the federal election may also distract buyers and sellers in May, with some choosing to avoid competing with the campaign.<\/p>\n

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\u201cAlthough, neither party has flagged any major changes to housing policy that would shift market expectations significantly, unlike the previous election where there were major changes proposed.\u201d<\/em><\/p>\n<\/blockquote>\n

\"Cash\"<\/p>\n

At its May meeting, the RBA raised the cash rate 25-basis points<\/span> for the first time in more than a decade, and this earlier and more compressed tightening cycle is likely to impact housing market momentum.<\/p>\n

As the cash rate rises, mortgage rates will begin to climb, reducing borrowing capacity, Creagh explained.<\/p>\n

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\u201cLooking ahead, these headwinds will continue to slow demand from prospective buyers and it\u2019s likely that activity will further ease, seeing price growth continue to moderate from the exceptional pace we\u2019ve seen over the last year,\u201d <\/em>she said.<\/p>\n<\/blockquote>\n

And the balance in market conditions should be good news for buyers looking to get into the market.<\/p>\n

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\u201cThere\u2019s a lot less competition, the stock isn\u2019t moving as quickly and the fear of missing out has subsided,\u201d<\/em> she said.<\/p>\n<\/blockquote>\n

But Creagh warned that buyers shouldn\u2019t overlook the fact that borrowing costs are on the rise and the recent period of exceptional price growth is at an end, with prices beginning to fall in some places.<\/p>\n

Meanwhile, it\u2019s time for sellers to reset their price expectations and be mindful that properties may take longer to sell with fewer competing bidders.<\/p>\n