Is the Property Market Battening Down the Hatches?

By JEFFREY GIBBS

The latest data from property CoreLogic shows that the Australian housing market is yet to bottom out, with a small rise in property values likely just a blip. On a rolling four-week basis, Sydney saw a 0.8 per cent rise, Melbourne 0.2 per cent, Perth 0.1 per cent, and Brisbane was unchanged. Adelaide is now the weakest of the fve largest capitals with values down 0.4 per cent.

The momentum in the housing downturn has been easing since September, with value falls virtually fat lining in February. However, the report warned that various factors have likely propped up prices and that deeper falls are on the way, with predicted interest rate rises set to coincide with other challenging market conditions. The report said that a lower than normal fow of new properties for sale had cushioned the market, with capital city listings over the past four weeks almost 20 per cent below the previous fve-year average for this time of the year.

This low advertised supply is likely to be keeping a foor under housing prices despite a clear drop in demand. Analysts have suggested that the surge in permanent and long-term migrants back to Australia could be another factor supporting the stronger market conditions. Most new migrants traditionally look to rent, but the super-tight rental market could be pushing new arrivals into buying. The report warned of tough times ahead, saying that the housing market is still facing considerable downside risk.

Interest rates may rise again, following this month’s 10th consecutive hike since May last year. The mortgage cliff, which will affect close to one million homeowners, is also yet to hit. Household budgets will come under more strain around the middle of the year if, as some experts predict, economic conditions up over the pandemic are further depleted and unemployment begins to rise. The report said that the next few months will be critical to understand whether the housing market is moving through an infection point or if it is simply the eye of the storm. It is clear that the market is yet to bottom out, and with various factors likely propping up prices, deeper falls are on the way. weaken, savings built

The report warned that the housing market is still facing considerable downside risk, and that it is too early to call a bottom of the cycle.