House price growth is slowing but experts say not to expect a crash. We look at what’s changed, and why today’s market may offer good opportunities for homebuyers.
Recent home price data from Cotality may be just what homebuyers have been waiting for.
The latest figures show zero (0%) increase in home prices nationally in May – quite a change from the past 12 months when the trend has largely been upwards.
But the national picture doesn’t tell the full story, and the numbers certainly don’t indicate a market “crash”.
Property values fell in Sydney (down 0.9%) and Melbourne (0.8%), with a barely perceptible price dip of 0.2% in the ACT for May.
Meanwhile home prices continued to grow in the other state/territory capitals and across regional markets.
Yet there are signs the tide could be turning in buyers’ favour.
Why is home price growth slowing?
The property market varies significantly across cities right now, in what Cotality describes as “multi-speed conditions“.
That said, market momentum is slowing – the result of higher interest rates, the cost of living squeeze, which is impacting consumer sentiment, and the Federal Budget’s proposed tax reforms aimed at creating a more “level playing field” between first homebuyers and investors.
While home prices seem to be slowing, AMP chief economist Dr Shane Oliver says “any forecasts for a property price crash are likely to be wide of the mark”.
“A crash would require wide-scale forced selling by homeowners – but without much higher unemployment forcing homeowners to sell this is unlikely as Australians will do whatever they can to keep servicing their mortgage,” Dr Oliver explains.
Is the property ‘super-cycle’ over?
You may have seen media reports questioning whether the so-called ‘property super-cycle’ has come to an end.
This super-cycle refers to the strong period of home price growth seen over the last 30 years.
But not everyone agrees that the current softer conditions are a sign that the market is heading south.
The Commonwealth Bank is still expecting property price growth both this year and next.
REA Group (which owns realestate.com.au) suggests only slightly lower home prices – largely as a result of the tax changes for investors.
Cotality points to the shortfall in housing supply, ongoing population growth, and continuing strength in the job market as reasons why we’re unlikely to see a sharp correction.
Opportunities for homebuyers
The good news is that there are plenty of buying opportunities right now, and they’re up for grabs no matter whether you’re an upgrader or first home buyer,
In Sydney and Melbourne, the advertised supply of homes for sale has risen to above-average levels, providing more choice and better negotiating power for buyers.
Auction clearance rates are down, and that’s seeing sellers increasingly open to pre-auction offers.
On top of all this, the expanded 5% Deposit Scheme is giving first home buyers a real chance to get into the market with a smaller deposit.
With all these shifts in favour of buyers, call us to today to discover the opportunities that may be open to you.
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