Why this spring market could be the best time to buy a property

By Sue Williams

August 25, 2022

Our first spring in three years without COVID concerns dominating the property market is set to see a move from a Hunger Games-type frenzy for buying homes to a more restrained Downton Abbey-style pace.

New Domain Buyer Demand Indicator data shows demand has now slumped from its October 2021 peak by 32.6 per cent for houses and 27.7 per cent for units, which is likely to create much more healthy conditions for purchasers.

“The upcoming spring selling season will give buyers the reassurance of time to make the right property decisions as homes are spending longer on the market and choice has lifted,” says Domain chief of research and economics Dr Nicola Powell.

“The transition from winter to spring will see a lift in new listings and an emergence of more buyers which will test the number of active buyers and the price expectation of sellers. This will be the first real rest of the property market since interest rates started to rise.”

For sellers, although market conditions have become more challenging, the research shows that those pricing homes to meet buyer expectations are still achieving quick sales. 

Underlying all the activity too is the fact that house prices in the combined capitals rose during the pandemic period by an average of 32.4 per cent, creating a strong boost in equity for home owners.

Market conditions are varied across the country, however. In Sydney, buyer demand for houses peaked in March 2021, seven months earlier than the combined capitals’ peak, which suggests it’s further along the price cycle than other cities, with affordability stifling demand.

Melbourne, Brisbane, Adelaide and regional Australia also peaked in October 2021, while Hobart peaked even earlier in February 2021, Darwin peaked in June 2021, Canberra in July 2021 and Perth much later in March this year, allying to the lifting of strict West Australian border controls. 

Adelaide units also peaked later in February 2022 in line with their increased affordability and higher levels of investor activity.

At the same time, the Domain report shows buyer demand for units is higher in Brisbane, Canberra, Darwin, Hobart and Perth – the opposite of Sydney, Melbourne and Adelaide.

“I think this is going to be a good spring for home buyers,” says Judi O’Dea of Ray White Paddington in Brisbane. 

“I want to tell them all that no one rings a bell when you hit the bottom of the market – but it could be ringing loudly right now, and I think it might be. 

“I acknowledge that the market has softened, and has come back about 10 per cent, but I don’t think it will fall any further, and I don’t believe the interest rate will go above four per cent. 

“So that’s some degree of certainty for buyers, a bit of a sweet spot, and they need to know that a home is a home and if you like something, buy it!”

In Melbourne, spring is likely to bring more optimism for buyers too, believes Marshall White director and auctioneer John Bongiorno. 

“This is probably one of the slowest lead-ups to the spring market we’ve ever seen,” he says. “It’s been an elongated winter.

“But buyers now seem to be absorbing the rate rises we’ve had and the pendulum is starting to swing back to buyers so we’re beginning to see some great results in response to properties on the market. It might be a slow spring in regard to the volume of sales but those properties that do come to the market will do well.”

There were only some segments of the market nationally that saw buyer demand at the end of this winter higher than the three-year average.

Demand for houses in Adelaide, for instance, was 18.3 per cent up, and for units there up 22.2 per cent. 

In Perth, demand was up 12.9 per cent for houses and 19.4 per cent for units, while in Darwin, demand was up 5.2 per cent for houses and a huge 25.8 per cent for units. 

Canberra saw demand for units rise 4.9 per cent over the average, while regional Australia had houses up 4.1 per cent and units up 1.1 per cent.

In Adelaide, LJ Hooker Adelaide Metro agent Marie Brus says she believes the city is at the tail-end of the cycle affecting the rest of the country.

“Buyer demand has definitely dropped off, particularly at the higher end of the price range,” she says. 

“But we always tend to be behind what’s happening in the other states and traditionally we don’t get the huge rises and drops that the others experience.

“We’ll take a bit longer to feel the fall, with the numbers definitely down. In the past craziness, we saw even horrible homes do well but this spring, I think people are thinking, ‘Let’s get out and do it!’ And good homes in good locations will always go well.”


Property market predicted to boom again after winter slump, data shows

By Eddy Meyer

It’s been a bleak winter for the Sydney property market after the extraordinary boom times of the past couple of years.
Prices have been falling sharply in recent months but new data suggests things might be looking up for spring.
Chief Economist at My Housing Market Dr Andrew Wilson said there has been an uptick in buyer and seller activity more recently.
“The latest data is perhaps telling us that there are some very early signs that the Spring market may be a little better than expected,” he told 9News.
“The time it takes to sell a property has just eased over the past month and auction clearance rates are certainly higher than they were over July.”
The latest data from Domain – which is part-owned by Nine – shows a surge in auction activity, the third week in a row that they’ve increased. They’ve increased 13.5 per cent across the country, but are up 16.5 per cent in Sydney.
Agents, too, are reporting more interest – particularly for good homes in good locations.
Marco Fabrizio from Melrose Estate Agents is selling a sprawling, luxurious seven-bedroom home in the Capitol Hill Estate at Mount Vernon in Sydney’s southwest.
It has a price tag that’s tipped to exceed $7 million.
“I put the property on the market yesterday and we had over a hundred calls. And really I haven’t experienced this level of inquiry on a property this year in this current climate,” Fabrizio said.
And that interest came not just from across Sydney, but around the world. 
He said there is a growing trend of buyers shunning properties requiring renovation or rebuilding, given the recent surge in building costs. It also makes them more focused.
“Special homes in good locations are selling for well above reserve,” he said.
“We sold a house in Eastwood on the weekend at auction. Seventeen registered buyers. It sold for $600,000 above the reserve price.”
Veteran western Sydney agent Andrew Chrysanthou of Harcourts Unlimited said there’s no doubt buyers were spooked after interest rates started rising sharply in May.
For sale sign at house
Now the shock has passed, he’s seeing much more activity coming into spring.
“I’ve found that there’s a lot more first home buyers and owner-occupiers buying at this present moment,” he said.
“The investors are still holding back or pulling back for the time being.”
When it comes to auction clearance rates, some suburbs have clearly out-performed the rest in the past three months.
They include North Parramatta, Wentworthville, Alexandria, Camperdown, Rockdale, St Peters, Girraween, Hurlstone Park, Connells Point and Darlington.

When it comes to prices, some are less optimistic about where prices might head in the next year or so.
Both Westpac and ANZ believe property prices in Sydney will fall by around 18 per cent by the end of next year.
ANZ Senior Economist Felicity Emmett says most of that fall will occur before the end of this year.
“Already prices in Sydney are down 6 per cent to the month of July, and in August they look like they’re down another 2 per cent or so,” she said.
“It is a significant decline but, by the end of it, prices will still be higher than where they were prior to the pandemic.”
Not helped if, as predicted, the Reserve Bank continues to lift the official interest rate over coming months – with another half a per cent rise expected when it meets on September 6.

Neighbourhoods where house prices have fallen by six figures as interest rates rise


By Kate Burke

House prices have fallen by more than $100,000 in three months in parts of the country as rising interest rates reduce borrowing power and accelerate price declines.

Six-figure sums were wiped from median house prices in Sydney’s north shore, northern beaches and inner west, as well as Melbourne’s inner east, in the June quarter, Domain data shows.

Prices in parts of Brisbane, Hobart and regional NSW also pulled back more than $50,000. The median house price for the capital cities combined fell by less than $10,000 by comparison.

The sizable price falls came after the Reserve Bank began lifting the cash rate from a record low of 0.1 per cent in May. The declines are expected to spread, with a fourth consecutive rate hike on Tuesday, increasing the rate to 1.85 per cent.


Domain chief of research and economics Dr Nicola Powell said the cash rate increases had accelerated the slowdown, which was initially driven by an increased supply of homes for sale, affordability constraints, rising fixed-rate home loans and an increase to the interest rate serviceability buffer.

“Borrowing capacity has been eroded by higher rates and a higher cost of living … and there’s more to come in terms of a further acceleration in a deterioration in prices,” she said.

Median prices in premium markets had lost the most value, Powell said, which was to be expected, as the upper end typically led upswings and downturns.

In Sydney, prices dropped $250,000 in the north Sydney and Hornsby region, $200,000 in the inner west and $187,500 on the northern beaches. Prices in eastern suburbs held steady at median of $3.45 million but were down $200,000 year on year, due to price weakness in previous quarters.

House prices in Melbourne’s inner east dropped $107,500, while the median in Brisbane’s west fell $50,000.

Sydney’s eastern suburbs and the Baulkham Hills and Hawkesbury region led unit declines in dollar terms, down $90,000 and $55,000. Prices also dropped more than $55,000 in Hobart and the Coffs Harbour and Grafton region.

Powell said price declines would continue to spread. The full impact of rate hikes had yet to be seen, and buyer demand would be further tested by an expected increase in homes for sale in spring.

Home buyer lending pulled back in June after the second cash-rate rise. The value of new owner-occupier loans dropped 3.3 per cent, and was 9.6 per cent lower than a year ago, Australian Bureau of Statistics figures released on Tuesday show.


Lending to first home buyers fell 10 per cent and was down 29 per cent year on year, while investor lending fell 6.3 per cent in June but was up 17.3 per cent over the year.

Westpac senior economist Matthew Hassan said the impact of rising rates in an already cooling market had been rapid. Areas with higher property prices had been most sensitive to increases, but the slowdown in prices was spreading and the full impact had yet to be seen.

Hassan expects the cash rate to peak at 3.35 per cent in February, and property prices nationally to decline 16 per cent from peak to trough, with Sydney and Melbourne to see falls closer to 18 per cent. Hobart and regional areas that had unprecedented growth throughout the pandemic, partly based on temporary shifts in population, may also be in for a hard landing.

Hassan said most households had substantial savings buffers that would put them in good stead to handle higher mortgage repayments. However, it would be a delicate balance for the RBA to slow demand and inflation while not triggering widespread problems for the housing sector.


Raine & Horne Lower North Shore partner Alex Banning said prices were correcting after a period of enormous growth and markets that had higher price rises had further to fall.

“The RBA gave people false hope when they said rates weren’t going to go up until 2023, 2024, so a lot of people just out took big loans … we saw exponential growth.”

The market had swung from one extreme to the other, he said. While prices were lower, most buyers were still having to compromise due to their reduced borrowing power.

Shore Financial senior credit advisor Greg Bishop was seeing more clients put plans to purchase on hold.


“No one really knows where the market is going to end up,” he said. “Prices have backed off … which is good for a lot of buyers, but they’re also facing increasing interest rates.”

Some lenders were honouring existing pre-approvals, Bishop said, as long as there was no critical credit change such as an increase in the loan to value ratio. Others were reducing borrowing capacity for pre-approved clients.

He urged those with pre-approval to check with their lender before purchasing a home as some buyers were finding out afterwards that their new borrowing power had fallen short.


Who’s to blame for Australia’s worsening rent crunch?

Brett Thomas, Property journalist

Decades of house price growth have caused a “brutal” trickle-down effect in the Australian rental market, leading to an unprecedented crunch.

But who’s to blame for the increasingly desperate situation many would-be tenants find themselves in?

As even high-income earners struggle to attain the Great Australian Dream of homeownership, they are being forced to rent for longer, pushing up prices and squeezing out those at the bottom of the chain who are competing for fewer and less affordable homes.

Combined with the rise of short-term letting, an unstable investor market, and an inadequate supply of social housing, this structural shift in the private rental sector is having a profound social and economic impact.

“We talk about trickle-down economics – that’s absolutely at play in the rental market in the most brutal form,” said Kate Colvin, national spokesperson for housing affordability campaigner Everybody’s Home.

Soaring demand, dwindling supply and skyrocketing prices is causing a severe rent crunch in Australia. Picture: Getty

South East Links is a support organisation that covers a fast-growing part of working-class Melbourne, including suburbs like Oakleigh, Springvale, Dandenong, and Pakenham.

Its chief executive officer Peter McNamara said an increasing number of people on low incomes or benefits were being locked out of the rental market.

“You’ve got little or no chance,” Mr McNamara said. 

“You’re up against people who are offering to pay six months’ rent in advance if that’s what it takes to secure a place to live. What chance have you got? If you’re struggling with the cost of living on $46 a day or you’ve got insecure work, how can you have six months of rent saved up?

“What percentage of that population has $10,000 in the bank?”

Structural market change takes hold

While current commentary surrounding the Australian housing market is all about the impact of dramatic interest rate rises and predictions of double-digit falls in prices, it’s easy to overlook the bigger picture.

Since 2001, median house prices in Sydney have risen by an astonishing 269%, from $322,500 to $1.19 million. In Melbourne they’re up by 296%, rising from $225,000 to $891,000, and in Brisbane there has been a 381% surge, from $178,700 to $860,000.

But even at those seemingly modest 2001 prices, mid-to-high income earners were beginning to struggle with affordability and forced to stay in the rental market longer.

A report by the Australian Housing and Urban Research Institute released in March 2020 found that “the private rental sector has been growing since 2001 at twice the rate of all households and at an accelerating rate in the 10 years from 2006 to 2016”.

It found that barriers to first-home ownership, particularly in capital cities, had contributed to “important structural changes in the private rental sector”, including an increase in dwellings with mid-market rents, and an increase in private rental households at mid-to-higher income levels.

The pandemic property price boom, which came after that report was released, brings those findings into stark relief. 

“People are being squeezed out of homeownership, so they stay in rentals longer, and in turn they’re squeezing out the people who would normally be renting cheaper properties,” Ms Colvin said. 

“So, they’re having to go to even cheaper locations. At the bottom, people are squeezed out altogether and that’s the group who are the lowest paid workers and the most insecure workers.”

Chris Martin, senior research fellow at the University of New South Wales’s City Futures Research Centre, agreed.

“Rental households have changed,” Dr Martin said. 

“More people are renting longer into their primary income-earning years. And more high-income households are renting – a couple of decades ago, they would have been in a home of their own.

“There has been a declining homeownership rate. People are being denied access to it because of rising house prices.

“Those dual-income households in their primary income-earning years can afford to pay more rent so they get ahead of low-income earners in the rental allocation process.”

The Airbnb effect is adding pressure

Another change in the Australian rental market has been the growing popularity of short-term leasing over the past decade, facilitated by companies like Airbnb.

While short-term rentals have always been popular in regional holiday spots, tech giants have brought the concept to the capital cities, taking over properties that would otherwise have been available to long-term renters.

Data tracking company airdna monitors 11,043 Airbnb listings in Sydney, of which 71% are entire homes. In Melbourne, it monitors 15,526 dwellings, 82% of which are entire homes.

Another data tracking service, Inside Airbnb, reports that average annual income for recent and frequently booked short-term rental homes in Sydney is $36,966, or $709.73 a week, which compares favourably to the current median weekly rent of $620.

In Melbourne, average annual income for frequently booked Airbnb homes is $31,402, or $603.88 per week, significantly higher than the city’s median weekly rent of $460. 

But here’s the kicker. In both cities, these in-demand properties are occupied less than 50% of the year. At the same time, long-term rental vacancy rates in Sydney and Melbourne remain at low levels, 1.5% and 1.7% respectively, according to SQM Research.

Once confined to holiday markets, short-term letting is now the norm in cities and suburbs. Picture: Getty

“The short-term rental business complicates the rental picture further,” Dr Martin said. 

“It has a number of impacts. Firstly, landlords may see a more profitable alternative in Airbnb and switch out of long-term renting into that market. And it opens opportunities for people to take a position in in rental housing as a way of financing second homeownership, or a holiday home.

“That way, the owner of a property can monetise it when they’re not using it.”

The investor dilemma

If there’s one solution that most economists agree upon when it comes to easing the housing crisis, it’s increasing rental supply.

But regulatory buffers in the investment lending market have had a negative impact for tenants.

A directive issued by the Australian Prudential Regulation Authority in 2014, aimed at cutting lenders’ exposure to interest-only loans and loans with low deposits, acted as brake on investors and saw the beginning of a sharp drop of supply into the rental market.

According to APRA, “through-the-year investor credit growth more than halved from 10.8% in May 2015 to 4.6% by August 2016”. 

At the same time, “the proportion of loans with small deposits declined and bank assessment of home loans improved”.

Cameron Kusher, executive manager of economic research at PropTrack, said the move heralded a fickler investment market that still persists today.

“As a result, investors were charged higher interest rates and it became much harder for them to take out loans, which saw investment fall,” Mr Kusher explained. 

“Not only that, but existing investors started to sell out of their properties as well.”

Investors hit another brick wall when Covid arrived.

“Through the pandemic, we saw a lot of investors sell out and there are a few reasons for that,” said Mr Kusher. 

“If you owned an apartment in Sydney or Melbourne, it became very hard to lease. And elsewhere, apartments in places like South East Queensland and Western Australia, where prices hadn’t increased for many years, started seeing some growth, so owners took the opportunity to break even or make a small profit.

“And then you had people selling their investment properties in order to upgrade their principal homes.”

In addition, the pandemic saw many people who were technically investors buy properties to use as holiday homes or family retreats.

“They are investment properties that are not being made available to rent,” Mr Kusher said.

With surging home prices and reduced rental yields in recent years, Dr Martin said there was little incentive for investors to commit to leasing their homes in the long-term. 

“There’s a big turnover – landlords enter the rental sector and leave,” he said. 

“In particular, they leave for owner-occupiers, or owners who put the homes in the tourism market, and that hole in the rental sector suddenly becomes much deeper.”

Inadequate social housing

With disadvantaged people and low-income earners facing the pointy end of this rental crunch, the provision of social housing has never been more important.

The new Federal Government has championed its $10 billion social housing fund, which will build 30,000 social and affordable homes across Australia within five years, beginning in 2023.

There are other programs operating at a state level, like Victoria’s $1 billion Big Housing Build will see the development of more than 2300 homes across metropolitan Melbourne and regional Victoria over the next few years.

But with a national social housing waiting list sitting at an estimated 160,000, it’s not going to be nearly enough – or soon enough.

“We absolutely need governments to invest in more social housing,” Ms Colvin said. 

“There’s a shortage of affordable rental properties and social housing is perfect for that because it’s targeted at the lowest income market. It can take households out of homelessness.”

Dr Martin said the social housing sector was in a long-term decline and it needed to be rectified.

“That sector has been on starvation rations for a number of decades, since the mid-1990s when the Howard Government slashed its funding,” he said.

“There have been a couple of periods since then – the Rudd Government had a stimulus package after the GFC, and a couple of state governments have broadened social housing spending – but that sector has been in decline over the past half century. 

“It’s part of the struggle that low-income renters are facing. There’s less public and community housing stock available and in the private sector they’re competing with high-income households who’ve been priced out of home ownership.”

Mr Kusher said governments had effectively left the rental market to the private sector. 

“It’s been pretty terrible over the past few years,” he said. “A lot of governments have been selling off their social housing and there has been a reduction in new builds. They’ve outsourced the supply of rental properties to the private sector.

“These new government schemes are better than nothing, but it’s not going to be enough.

“The only real solution is to get more investors into the market but it’s not a popular thing to say and it’s not a popular thing to support.”


Almost half of Aussie parents fear kids will never afford a home

Sophie Foster

Woman drinking coffee on back of moving van

A new survey has found almost half of Aussie parents now fear their children will never afford to buy a home, with many bracing for the need to step in to help them in future.

While the real estate boom has made many homeowners wealthier than ever on paper, the survey of parents of teenagers aged 13-18 – commissioned ahead of the annual Suncorp ESSI Money Challenge – found 47 percent believe it’s already impossible for their children to ever buy a home.

Commissioned by the Financial Basics Foundation and Suncorp, the survey found almost a third of parents (32 per cent) believed that it wouldn’t be until later in life that their children would be able to afford property – much later than it was for earlier generations.

It also found that 5 per cent of the 1,000 parents surveyed were bracing to have to help their child buy a property when the time came.

Half of the parents surveyed had discussed rising interest rates with their teenagers and the impact it had on mortgage repayments and family finances, while the other half said their children were oblivious to what was happening.

Suncorp Bank executive general manager for everyday banking, Nick Fernando said the current economic climate made teaching young people financial decision-making skills all the more important.

Waitress In Cafe Taking Customer Order

Teaching teenagers how to manage their income early off weekend and after-school work was increasingly important.

Financial Basics Foundation CEO Katrina Samios said it was important to get started on financial literary early given what lay ahead for the children of today.

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