Weekly Market Update (29 Sept 2023)

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Weekly Market Update (29 Sept 2023)
  1. Housing Affordability in Crisis (Source: Brett Warren)

    Australia’s housing affordability has reached its lowest level in over 30 years due to a rise in mortgage rates and high property prices. A new report reveals that a median-income household can now afford loan repayments on just 13% of properties sold. Even high-income households are facing strained affordability, with only 50% able to afford loan repayments on all homes sold. The increase in mortgage rates has reduced borrowing capacities and mortgage serviceability is worse than ever. Affordability is particularly severe in NSW, Victoria, and Tasmania. Single-income households and those at the younger and older ends of the age spectrum are the most affected. First-home buyers are struggling to enter the market due to worsened affordability and the challenge of saving for a deposit. Despite the housing crisis, it may still be a good time to buy due to low competition and minimal risk of oversupply. However, the market could become more fragmented, with higher-income individuals buying in inner-city suburbs while those in outer suburbs continue to struggle financially. The advice is to focus on buying investment-grade properties in A-grade locations.

 

  1. Median house prices in south-east Queensland (Source: Domain)

    Median house prices in south-east Queensland have exceeded $2 million, driven by high demand for beachside properties and interstate migration. Suburbs such as Surfers Paradise, Brisbane’s Hamilton and New Farm, and coastal areas like Noosa Heads and Broadbeach Waters have seen significant price increases. The limited supply of housing and the region’s desirability as a beachside destination are driving the upward trend. Experts predict that the trend will continue as south-east Queensland remains more affordable compared to Sydney and Melbourne. Real estate agents in the area anticipate a strong selling season ahead.

 

  1. Top-performing suburbs in each city over the past year (Source: Brett Warren)

    New data from Domain reveals the suburbs within 15km of each major Australian city leading the recovery in the property market, with median prices increasing by as much as 52.9% over the past year. In Sydney, affluent suburbs like Milsons Point and Bellevue Hill saw the strongest price growth, while in Melbourne, Caulfield South and Armadale were the top performers. Brisbane’s best-performing suburbs mostly had prices around $500,000, with the exception of Rochedale where prices rose to $1.58 million. Adelaide’s top-performing suburb, Glenelg North, saw a 52.9% increase in median unit prices. Canberra’s top-performing suburbs were dominated by unit sales, with Denman Prospect leading the way. Perth saw strong price growth in suburbs like Winthrop and Swanbourne. The main drivers of price growth in these suburbs were tight supply and high demand.

 

  1. Short-term Resales (Source: Eliza Owen)

    Short-term resales have become a major trend in the housing market in 2023, with 16% of listings added for sale in winter owned for less than three years, the highest level since 2008. This trend started in May 2022, coinciding with higher interest rates. Brisbane and South-East Queensland had the highest concentrations of short-held listings, reflecting their popularity as migration destinations during the pandemic. Rising home values are expected to make short-term resales less concerning for homeowners. The trend is more pronounced in regional Australia, but it is also seen in capital cities. Overall, short-term resales are not expected to pose a risk to financial stability, especially as housing market values continue to rise.

 

  1. CoreLogic Auction Results (Week ending 24 Sept 2023)
    (Total Auction / Clearance Rate)

    – Sydney: 975 / 74.4%

    – Melbourne: 1,038 / 70.5%

    – Brisbane: 237 / 70.3%

    – Perth: 20 / 29.4%

    – Canberra: 102 / 57.1%

    – Adelaide: 174 / 84.2%

    – Tasmania: 1 / 0%

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