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What’s Really Happening Across Australia’s Property Markets?

Media continues to discuss the downturn in “the Australian property market”, but our analysis confirms there are many different scenarios playing out across Australia.

There really is no such entity as “the Australian property market” – because it’s normal to have, at any point in time, markets which are rising, markets which are stagnating and markets that are falling.

This is certainly the case right now in Australia. This is the norm for residential real estate in this very large and diverse country – and it’s nonsense for economists to speak of “Australian property prices” rising 10% or falling 10% – because there is no national market situation.

This reality is illustrated vividly by the quarterly editions of The Price Predictor Index, in which we analyse 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, which they have, 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 close to 500 towns and suburbs where sales activity is rising and over 500 more 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 the 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 2022.

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 2022.

So, right now, our quarterly analysis shows that there are markets that continue to rise, many that remain consistent despite all the disruption, others that have tapered off at levels below the previous peak and some that are showing distinct patterns of decline.

This is “situation normal” in Australian real estate.

To suggest that markets are falling everywhere because interest rates are rising is nonsense and shows scant understanding of how real estate works in Australia.

If rising interest rates WAS the primary catalyst for markets to fall, they would be falling everywhere – and clearly they are not.

Sales activity and prices remain solid to strong in many locations across Australia.

Our new Autumn 2023 edition of The Price Predictor Index shows that Perth, Darwin and Adelaide are the strongest capital city markets, while Canberra and Melbourne are the weakest overall.

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