The residential property market has been making the economic uncertainty caused by the Covid-19 restrictions even murkier. Property prices are tipped to continue increasing through the latter half of 2023, with the Reserve Bank deciding to hold the cash rate at an all-time low not seen since 2012. HSBC’s local chief economist Paul Bloxham described this as an “extraordinarily uncertain time”.

He says the two forces that are currently at play are pushing prices in opposite directions, with population growth and lack of supply having a larger impact. The low number of available properties, coupled with the rising demand has influenced auction clearance rates, which have been unseasonably high.

PropTrack senior economist Paul Ryan notes that strong demand, relative to available properties, has eclipsed the decrease in borrowing capacity. ANZ is tipping rates to remain on hold for most of the year, with property prices expected to rise 9% by 2024 while HSBC predicts they will increase between 3 and 6%.

Ray White chief economist Nerida Conisbee states that the price growth is now “quite firmly entrenched”, particularly in Adelaide, Perth, and Brisbane. While the market sees an increase in scheduled homes, and many borrowers are able to access more loans than before with rising wages and lower inflation, the Reserve Bank estimates that 880,000 people will move from fixed-rate loans onto deals offering variable rates of about 6 per cent. This will equate to thousands of extra in repayments each year.

Yellow Brick Road Home Loan’s executive chairman Mark Bouris was relieved that the RBA decided to hold the cash rate at 4.10 per cent and says it’s not necessary to raise the rates. While mortgagee possessions listings on Realestate.com.au remains low and SQM Research’s distressed list metric is showing only a small shift, some experts are still expecting the market to tip in favor of buyers in the coming months.

The Agency’s Geoff Lucas anticipates an increase in supply which should “dampen the rate of increase or a dampen in the prices of properties”. At the same time, Australians are beginning to borrow again, with owner-occupier and investor lending rising in May.

First home buyers are also out in the market, with many using their equity gained from the pandemic period to upgrade their homes. In conclusion, a lot of homeowners have seen their equity increase while borrowing has become easier.

The property market is in a state of flux, with forces pushing in opposite directions and mixed results anticipated. While some are expecting a slump in prices, largely due to an increase in supply, others believe that the market will remain stable or even see continued growth.