Why you need to buy NOW (if you can): How Australia's house prices are about to soar even higher
Dear Fellow Property Investor,
Australian big city house prices are tipped to surge by more than a third during the next three years with Sydney's median price set to hit the $2 million mark.
The increases forecast between now and June 2027 would be even more significant than the price rises since the onset of Covid four years ago, which covered interest rates aggressively rising from record-low levels as immigration soared.
Oxford Economics Australia is forecasting that Sydney's median house price will hit $1.934million by June 2027, with Perth reaching $1million.
The median price in Melbourne and Brisbane was also expected to reach seven figures during the same period as prices rose between a third and 43 per cent.
Even before the rate cuts, Australian home lending has increased 13.3 per cent during the past year in a sign buyers fear missing out on more price rises, new official lending figures released on Monday revealed.
This means average-income earners on a $98,218 salary, and with plenty of savings for a 20 per cent mortgage deposit, are being urged to shop around now for a suburban house or inner-city unit under $640,000 to avoid missing out on the boom.
Until the Reserve Bank cuts interest rates, possibly from late 2024, banks are only able to lend a borrower 5.2 times their pay before tax.
But once the rate cuts start, banks will be able to lend more, leading to even higher prices, with values tipped to particularly soar at the more affordable end of the market.
'The November 2023 cash rate hike to 4.35 per cent is expected to be the last this cycle, with the next movement downward,' Oxford Economics Australia said.
'Anticipated interest rate cuts from late 2024, overlaid by a sustained housing shortage, are set to accelerate price growth in 2025.'
Australia's net overseas migration level hit a record high of 548,800 in the year to September but Oxford Economics Australia is expecting that to slow to 410,000 in 2023-24 and 250,000 by the 2026-27 financial year.
'Net overseas migration is driving the current surge in Australia's population growth,' Oxford Economics Australia said.
'While three-quarters of new overseas arrivals enter the rental market, which relies on investor supply, there remains a channel that is adding to the competition for established properties.'
The more affordable end of the property market is tipped to soar as baby boomers downsize and those aged 30 to 45 look to escape rising rents.
'Strong growth in rents is likely having a spillover effect, encouraging some households to enter owner-occupation,' the report said.
Price rises are tipped to grow by at weaker pace in cities like Adelaide and Hobart, that boomed during the pandemic but no longer receive a huge influx of interstate migration.
Canberra, now Australia's second most expensive capital city market after Sydney, was tipped to slip into fourth place behind Melbourne and Brisbane by mid-2027 - even with a typical house price in the seven figures.
Let me ask you something…
Do you have a game plan for 2024?
Or will you watch savvy, educated, market-ready investors snap up all the bargains at the bottom of the Melbourne property cycle (which, in my opinion, already bottomed out in November 2022), again?
Or, will you join them?
So, what are you waiting for?
Reserve your place and join me and 55 like-minded property investors for the first Real Estate Investing Fast Track Weekend for 2024!
In the four years since the pandemic began, home prices around the country have staged a remarkable feat.
From fears of sharp falls through the pandemic, to predictions of steep declines when interest rates began to quickly climb, home prices have defied the expectations of many, surging 39.9% nationally.
Throughout this four-year period, multiple factors have influenced and shifted housing trends, with the housing market cycling through different phases as a result of the pandemic's wide-ranging economic and social impacts.
The supply of properties for sale, population growth, building activity, rental market conditions, interest rates, and interstate and regional migration have all affected home price growth, as well as how it has been distributed Australia-wide since March 2020.
And at the same time these factors have faced a complex interplay of economic policies, consumer behaviour, and broader societal changes in response to the pandemic.
In the past year capital city markets have outperformed regional areas (7.64% versus 4.67%), but comparing growth since the pandemic onset, regional home prices have significantly outperformed their capital city counterparts in every state except WA and NT.
This outperformance was largely accumulated throughout the pandemic property price boom.
At the very onset of the pandemic, there was a pause in the housing market as lockdown restrictions, closed borders and uncertainty weighed, with many thinking home prices would fall.
In fact, the opposite occurred. Housing demand surged, and along with record low interest rates and limited stock for sale, combined to drive a price boom that saw national prices growing at the third-fastest rate in Australia’s history.
Let me ask you something…
Do you have a game plan for 2024?
Or will you watch savvy, educated, market-ready investors snap up all the bargains at the bottom of the Melbourne property cycle (which, in my opinion, already bottomed out in November 2022), again?
Or, will you join them?
So, what are you waiting for?
Reserve your place and join me and 55 like-minded property investors for the first Real Estate Investing Fast Track Weekend for 2024!
A handful of Melbourne suburbs recorded double-digit property price increases over 2023, bucking the city’s wider trend of modest growth.
Melbourne’s median house price median rose 2 per cent to $1,047,000 over the 12 months to December, and its unit price grew 4 per cent to almost $580,000 in the same period, the latest Domain House Price Report showed.
In the ever-popular inner north suburb of Fitzroy, however, house prices increased 16.4 per cent to a median $1.63 million last year. Unit prices in neighbouring Fitzroy North also shot up over the year, up 12.5 per cent to nearly $617,000.
Burwood (up 11.9 per cent to $1,411,000) and Maribyrnong (up 11.9 per cent to $1,031,000) had the next highest house price growth, and Notting Hill (10.8 per cent to $385,000) and Bayswater (10.5 per cent to almost $608,000) were the closest for units.
Domain chief of research and economics Dr Nicola Powell said the growth was out of character for Melbourne. “There are a handful of suburbs that have seen double-digit increases and declines, but the bulk of suburbs haven’t seen a lot of movement in the past 12 months,” she said.
Powell said Fitzroy and Fitzroy North had over-performed particularly when compared against blue-chip suburbs which typically lead market movements.
Nelson Alexander agent Jonathan West said sought-after suburbs tended to help boost prices of their neighbours, particularly if they held high-quality homes. Brunswick East, for example, recorded house price growth of 4.3 per cent over 2023 to a median of $1,249,000.
“It’s the connection suburb to Fitzroy North and Carlton North,” West said. “They will start coming out of Carlton North and Fitzroy North and look in Brunswick East to see what’s around, then they’ll hop to Brunswick and Brunswick West if there’s nothing there.”
Brunswick West had less spillover effect, however. House prices there fell 19.8 per cent to $923,000 over the year.
West said the Brunswick West neighbourhood included homes which needed more work, and didn’t attract the same premiums as turnkey properties.
“Brunswick East is more expensive, there’s no doubt about it. With Brunswick West, you get bigger blocks and wider streets,” he said. [The median price] is based on those older style double-fronts that need a lot of work.”
Prices fell the furthest in the unit markets of Clayton South (down 23.2 per cent to $460,000) and St Kilda West (down 20.7 per cent to $486,000), and for houses the biggest drops were in Elwood (down 19.8 per cent to $2,085,000), Brunswick West and Alphington (19.4 per cent to $1.55 million).
Westpac senior economist Jarek Kowcza said the demand for renovated homes was a common trend because of Australia’s high inflation, particularly in the construction sector.
“Properties that are ready for people to move into are really popular,” he said. “The cost of building a new home has been one of the main contributors to inflation.
“So that’s meant the cost of renovating the home has really increased. The availability of staff and materials are also a factor.”
Let me ask you something…
Do you have a game plan for 2024?
Or will you watch savvy, educated, market-ready investors snap up all the bargains at the bottom of the Melbourne property cycle (which, in my opinion, already bottomed out in November 2022), again?
Or, will you join them?
So, what are you waiting for?
Reserve your place and join me and 55 like-minded property investors for the first Real Estate Investing Fast Track Weekend for 2024!
The Reserve Bank of Australia’s (RBA) unprecedented monetary tightening, which has seen the largest and sharpest rise in interest rates in Australian history, has done little to curb home buyer enthusiasm.
CoreLogic recorded the strongest preliminary auction results in three weeks, with 73.8% of homes taken to auction nationally returning a successful result.
It was also the eighth consecutive week that a preliminary clearance rate of 70% or more was recorded:
Sydney recorded a preliminary clearance rate of 78.7%. This was 4.2% higher than last week’s result (74.5%), which revised to 70.8% at final figures.
However, Melbourne recorded its lowest preliminary clearance rate in 11 weeks, down 2.8% from last week’s preliminary rate of 72.9%, which was revised to 69.5% at final numbers.
The next chart plotting quarterly growth shows that home values continue to rise in the face of the RBA’s aggressive tightening:
Sydney leads the pack, with values soaring by 4.9% over the quarter. This has driven values at the 5-city aggregate level up by 3.4%.
Indeed, values at the 5-city aggregate level have now rebounded by 4.2% from their 7 February low, driven by a very strong 6.4% rebound across Sydney:
Westpac recently described the current house price rebound as highly unusual given it has occurred despite ongoing interest rate rises and off low transaction volumes.
“Housing recoveries typically only emerge once the RBA is actively cutting rates or is very clearly poised to do so. Price gains also tend to follow a sustained lift in turnover, not vice-versa”, Westpac noted.
Unusual is an understatement given mortgage rates have roughly doubled since the RBA began tightening and borrowing capacity has shrunk by around one-third.
The positive forces of record immigration, soaring construction costs and limited stock on market continue have created FOMO (fear of missing out) and continue to push house prices higher, despite the RBA’s aggressive tightening efforts.
Let me ask you something…
Do you have a game plan for 2023?
Or will you watch savvy, educated, market-ready investors snap up all the bargains at the bottom of the Melbourne property cycle (which in my opinion by the way has already bottomed out in November 2022),
Or will you join them?
So, what are you waiting for?
Reserve your place and join me and 55 like-minded property investors at the next Real Estate Investing Fast Track Weekend!
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