The strength of real estate has been breathtaking in the past few months, with media headlines exalting incredible prices above reserve as buyers compete for a limited number of properties on the market.
If you look across Australia, it’s odds-on all the capital cities will achieve double-digit growth in the residential sectors this year.
For March, the average rise in prices was 2.6%, which beats the previous year’s 2.1% gain achieved as we stepped toward the pandemic precipice.
Industry research CoreLogic reports recent prices have been accompanied by 80%+ auction clearance rates in Sydney (89%), Canberra (88%), Melbourne (83%) and Adelaide (80%). Every capital is blitzing their long-term average for sales at auction.
So what’s heating the market? The supply of properties is not meeting the demand of buyers. Put simply, there are not enough properties to go around and that, more than anything, is pushing prices north.
Investors are also showing renewed interest with demand for rentals rising in Perth and Darwin, and the Covid-caused slump dissipating in Sydney and Melbourne. Across the nation, rental demand is up 26% compared with last year. Detached homes are out-performing units, however.
These factors have a strong cohort of support – record low interest rates, strong economic confidence, government incentives for first-time buyers and the pent-up demand caused by nervous owners withdrawing from the market when the global pandemic hit.
You might assume that now the brakes are off, the market would be flooded with buying opportunities. But that’s not true anywhere except in Perth.
So what does this mean in our local area? Here are some observations:
Don’t panic. If you’re serious about your property quest, then stick with your plan. You will be successful eventually. It’s a great idea to talk to local agents and join their email lists to see what’s coming on to the market and whether there are any “off-market” buying opportunities.
Don’t try to time the market. Waiting for the market to go down could backfire. There is a wide range of research that shows the folly of this strategy. Despite the wisdom of doomsayers, the prices may continue to rise for some time.
The market won’t stay hot forever. There’ll be a correction and prices will level out. The unknown is what this level might be. Could it be this week’s prices, or those achieved in three months. So, don’t second-guess the market. Stay with your plan.
Continue to research and monitor. Remember, the Australian property market comprises thousands of micro-markets. So rather than worry about media headlines, keep looking at the results being achieved in areas where you’d like to buy. Be mindful, too, of the style of property and how it is performing price-wise.