Welcome to our Autumn Great Ocean Report. 
As real estate agents, we get asked a lot “how is the market?” But lately it’s reached heightened levels as both potential buyers and sellers try and work out what is happening. As usual with our reports we will try and deconstruct this.
The easiest way to deconstruct any property market is to firstly focus on the general psychology of the buyers and potential sellers. The best way to describe the psychology in recent times has been “wait and see”. With the RBA finally hitting pause in April it signals that if we are not at the top of the interest rate rises, we are close. For those who are wanting to make a move, it now allows them to plan their move with a greater level of certainty than was previously the case.
There are also other factors that will provide a level of comfort and that is that the four largest property markets in Australia; Melbourne, Sydney, Brisbane and Perth have all recorded increases in their median house price in March after stabilising in February according to CoreLogic. This is the first rise since April 2022 with CoreLogic’s National Home Value Index rising 0.6%. This is important from a psychological aspect for buyers and sellers as the dire predictions for the housing market have just not eventuated. Over the previous 12 months, Melbourne house prices had fallen approximately 9% from historic highs, which given the interest rate rises and dire predictions by some experts, is a very palatable result.
Why are we seeing house prices rising given interest rates were still increasing? Lack of supply is one major cause. This is lack of supply of quality houses for sale while many metropolitan home owners have been waiting for conditions to improve to sell. Also a spill over from a chronic under supply of available rental properties. With rents dramatically increasing and limited availability, it makes buying an option for some people rather than renting, despite higher interest rates. These low rental vacancy rates are being driven by a rapid increase in migration levels post COVID for both skilled migrants and international students. They all need somewhere to live and some do also have the ability to buy.
What this lack of supply does is put a floor under the property markets and in turn increases the confidence levels of those who wish to transact. Some potential buyers have been holding back because they were worried that values would drop and potential sellers have been waiting for a clear signal that it’s ok to get going. This has a flow on affect as sellers are often buyers and buyers are often sellers. For owner occupiers this is usually driven by lifestyle change needs; downsizing, upsizing or changing location to suit their situation.
So how does this affect the coastal markets?
It affects it in two ways. Both in sentiment and in the flow on of money.
If values are seen to be stabilising or even rising then it provides more confidence for those wanting to buy to do so. Also a lot of funds used to purchase on the coast come from the sale of assets in the metropolitan areas. Essentially many of the coastal buyers are asset swapping. With stable or improving conditions this allows those future coastal buyers to sell in the city with increased confidence.
For those that are borrowing they can see that interest rates are stabilising and in particular, long term fixed interest rates. Most commentators seem to agree that there is likely to be only one more interest rate rise although the predicted timing of this varies.
We are having a lot of conversations with potential vendors about their situation; their timing and their needs at present to tailor a solution that is right for them. From a potential buyers perspective, we know the emotional attachment to the coast rarely wanes but they get distracted by uncertain times. As conditions continue to stabilise in terms of certainty we would expect engagement from buyers to increase if the metropolitan markets continue to improve. Given the chronic shortage of supply underpinning the market, this is more probable than not.
We hope you found this Great Ocean Report informative. If we can be of any assistance in any real estate matter please do not hesitate to call.