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Data Defies Doomsday Predictions On Prices

There’s a lot of media speculation around about the downturn in what economists call “the Australian property market”, with doomsday predictions for house prices in 2023 – but when you look at the actual data, that’s far from the reality.

There continue to be growth markets right across the country, as well as some which have been in decline since 2021 – long before interest rates started to rise.

For the Summer 2022-23 edition of The Price Predictor Index report, we analysed thousands of housing markets throughout Australia to determine the patterns with sales activity, which means buyer demand.

We do this because sales volumes are a forward indicator of what will happen with prices.

Rising transaction levels are usually a precursor to property price growth.

Equally, if sales activity is falling, price growth will slow, or stop – or prices may fall.

We predicted the recent decline in prices in Sydney, well ahead of the interest rate rises, because there had been a dramatic fall-off in sales activity in our biggest city.

Equally, we forecast that Adelaide and Perth would resist the downturn pressures, because sales activity in those cities continued to be strong.

Our new analysis of the latest sales volumes data shows that while some locations are in decline, there are plenty that are still pumping strongly.

Across Australia, there are over 800 towns and suburbs where sales activity is rising and hundreds of others with consistent market performance.

There are also many markets where sales activity has tapered off and some where there is a distinct pattern of decline.

The media has linked that decline, in some markets, to recent interest rate rises – but our analysis shows that demand in the majority of those locations started to drop off well before the Reserve Bank announced its first rise in the official interest rate in May.

Our analysis shows that transactions have declined in Sydney and Brisbane – and in lifestyle markets such as the Sunshine Coast, Byron Bay and the Central Coast in NSW since the middle of 2021.

Transaction numbers have been fading quarter by quarter since then – with a quite dramatic decline in sales activity in Sydney and Brisbane, in particular, in the March Quarter of this year.

This drop-off in market activity has more recently started to show up in the median house price data.

As is always the case, there is a time lag before a change in market activity translates into a change of price behaviour.

This means that judging the performance of a market by median house price changes alone will not paint an accurate picture of what is happening.

Our analysis of market patterns right across the nation confirms that there are still many growth markets in Australia, particularly in the smaller capital cities.

Perth suburbs, for example, continue to experience strong buyer demand and high transaction levels with prices still rising – particularly in the more affordable areas.

The Adelaide market, which I’ve long considered one of the best prospects in Australia, continues to show consistent strength.

Darwin continues to experience busy sales activity and it continues to offer investors the highest yields in any capital city.

While the shine may have come off the Sunshine Coast market in recent quarters, other regional Queensland markets are still pumping strongly – including Toowoomba, Townsville, Gladstone, Mackay and Rockhampton.

Within Melbourne, affordable outer ring suburbs are still recording high levels of sales.

We’ve also identified a high number of markets which are neither booming nor crashing – they’re chugging along with steady sales activity, in defiance of all the economic disruption that’s currently occurring in the background.

The common feature of most of the strongest markets nationwide is affordability, which is the key driving force in real estate at the moment.

It all bodes well for solid markets in 2023, with plenty of locations across the nation set to deliver price growth in the year ahead.


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