Welcome to our early Summer Great Ocean Report.
It is a fascinating time in the Australian property markets at present with different markets performing at different levels and even different styles of properties within those markets achieving different results depending on their price and appeal.
Most metropolitan markets have been fairly robust through 2023, despite interest rate rises, mainly supported by a strong migrant intake. All capital cities except Hobart and Darwin have seen increases in their median house prices from their lows in early 2023 with Brisbane, Adelaide and Perth back to their previous cyclical highs and Sydney not far behind.
In the coastal markets the sentiment has been more subdued with an air of caution. It does not however mean that transactions are not occurring it just means that the property purchase needs to make sense to those who are buying.
An example of this is that we are seeing an uptick in permanent home buyers more than we are holiday house buyers at present. This is because many of these buyers are asset swapping in that they have already sold, typically in Melbourne, have downsized into an apartment and are now looking for a coastal home. These buyers are not affected by interest rates and are taking advantage of the reduced buyer competition to buy on the coast now.
They are looking for the right property though, one that is of a quality that they can use as a permanent or part time permanent home. This has facilitated the patchwork theme in the market where some properties or positions are being pursued while other properties are being overlooked.
Looking forward, we know that the emotional attachment to the coast is still there and as the weather continues to warm up this will only increase. What buyers are looking for more than anything is economic stability. In the past two weeks (written mid December) there is increasing talk in the both the US and Europe that interest rates have peaked and the next interest rate move in 2024 will be down. Australia tends to follow overseas trends and with recent favourable inflation and employment numbers are indicating that interest rates are likely to have peaked here also.
With this we have seen an uptick in enquiry and sales in December as the early movers start to become active. As we saw during COVID, sentiment can change quickly and there is a high probability that those who have been sitting on the fence wanting to make a move but have been taking a wait and see attitude are more likely to engage. For them it is not a capability issue, they just want a stable economic environment to make a decision and this will be provided once it’s generally accepted that interest rates have peaked in Australia.
Therefore we believe that 2024 is likely to be a steady year in real estate with both buyers and sellers knowing that interest rates rises are over and enjoying a more stable operating environment.