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.”