First-time home buyers have at last been treated with decreased property prices, as all major cities except Darwin recently recorded negative growth in dwelling values. After two years of soaring prices during the pandemic, it’s a welcome relief for a lot of Australians to finally witness house prices ease in many areas.
CoreLogic data reveals that 79.5% of house and unit markets analysed experienced declining values during the September quarter. This downward pressure on the market has been led by the six consecutive monthly cash rate increases, up from 0.10% to 2.60% since April. Over time, the RBA aims to combat inflation and reduce it to the 2-3 per cent range with cash rate increases.
Over the past 30 years, the Australian economy has recorded six cycles of growth and an equal number of declines, influenced by factors such as fiscal and monetary policy, economic shocks, and broader economic conditions.
Throughout these fluctuations, Australia’s median property price has risen by 382%, establishing an upwards trend over the past three decades. This is a positive indication that over the long term, dwelling values increase as a result of a combination of supply restrictions, a preference for eastern seaboard locations and population growth over time, causing continuously growing demand for housing.
Until the COVID pandemic, houses tended to outperform units and metro locations outperformed regional locations, as the population tends to flock to capital areas and opt for low-density housing options. However, throughout the pandemic there was a distinct shift in preferences which led to some regional areas outperforming capital growth in cities. Although property prices may rise and fall in the short term, the long-term trend for Australian housing values is increasing.
Opportunity for new buyers to enter the market
Though markets have weakened since the first rate rise this year, this provides an opportunity for new buyers to enter the market at a slightly discounted rate. With recent high commodity prices and rising interest rates placing pressure on homeowners, it’s a welcome relief for first home buyers to see property prices easing slightly, providing a chance for eager buyers to finally enter the market after a challenging few years.
For first-time buyers, now is an advantageous time to purchase a property while prices are lower. But for homeowners, the decision to sell comes down to your personal situation. Just remember that selling on a falling market means your next home may be purchased for less than it would have cost six months ago and, for many, your home will still be worth much more than it was in 2020. So, if you are thinking about selling now, you can capitalise on the smaller price gap between the property you are buying and the one you are selling.
Upwards trend in the market over the long term
Ultimately, the trends over the past three decades suggest that homeowners who purchase and hold a quality property over the long term will be rewarded with considerable tax-free capital growth. Upswings and downturns are a regular occurrence in the market, but the most important factor is the long-term trend, which for the Australian property market is upwards.
If you are hesitant about entering the property market amidst the changing conditions and uncertainty, get in touch with your local First National Real Estate office to discuss your options and speak to a property expert.