What is driving the surge in house prices?
Property prices have soared almost 7% this year alone. With the upswing predicted to continue, we look at what is driving national housing values higher and why it could pay to get into the market sooner.
So, what is pushing prices higher?
The key factor putting a rocket under property prices is a shortage of homes listed for sale. Homeowners are sitting tight rather than selling across several cities, and that is increasing competition between buyers.
According to CoreLogic, Adelaide, Brisbane and Perth have particularly low levels of homes for sale – about 40% less than previous 5-year averages. There is a bit more choice for buyers in Sydney and Melbourne, but both cities are still recording housing price gains (Sydney in particular). That is because ricing prices are not just about a lack of homes listed for sale. Record levels of net overseas migration are also a contributing factor.
In the year to March 2023, net overseas migration added 454,400 people to our population. That is an extra 1,245 people each day, all looking for a home. And according to ABS data, most immigrants settle in Sydney and Melbourne.
So, despite the high interest rates, there is an upward pricing pressure on the nation’s five biggest capital cities (Hobart, Darwin and Canberra meanwhile have all seen house prices drop over the past 12 months).
What does this mean for home buyers?
As home prices nudge towards new highs, ProTrack says last year’s price falls have been completely reversed. And most of the data suggested that prices are unlikely to take a tumble any time soon. That’s because it is possible that interest rates have peaked, population growth is rebounding strongly and there is a shortage of new home builds.
Already we are seeing a surge in home loan applications as more Australians recognise the current market provides a window of opportunity to buy before values rise even higher.
If you have got your eye on the property market, call us today and we can help you assess your borrowing power in the current climate, and even help line you up with pre-approval so you are ready to strike when the opportunity arises.
Frequently Asked Questions
Why are house prices currently surging?
The surge in house prices is often attributed to a combination of low interest rates, limited housing supply, and increased demand from buyers.
How do low interest rates affect house prices?
Low interest rates make borrowing cheaper, allowing more people to afford mortgages, which increases demand for housing and drives up prices.
Is the COVID-19 pandemic affecting house prices?
Yes, the pandemic has influenced house prices by changing homebuyer preferences and causing disruptions in the housing supply chain.
How does population growth impact house prices?
Population growth increases the demand for housing, which can lead to higher house prices, particularly in urban areas.
Can foreign investment affect local house prices?
Foreign investment in real estate can increase demand and prices, particularly in major cities and popular locations.
Is it a good time to buy property during a price surge?
This depends on individual circumstances. Potential buyers should consider market conditions, personal finances, and long-term investment goals. Consulting with a real estate expert is advisable.
Phone: 1300 855 022
Email: clientservices@zippyfinancial.com.au
Zippy Financial is an award-winning mortgage brokerage specialising in home loans, property investment, commercial lending, and vehicle & asset finance. Whether you are looking to buy your first home, refinance or build your property investment portfolio, the team at Zippy Financial can help find and secure the right loan for you and your business.
About the Author:
Louisa Sanghera is an award-winning mortgage broker and Director at Zippy Financial. Louisa founded Zippy Financial with the goal of helping clients grow their wealth through smart property and business financing. Louisa utilises her expert financial knowledge, vision for exceptional customer service and passion for property to help her clients achieve their lifestyle and financial goals. Louisa is an experienced speaker, financial commentator, mortgage broker industry representative and small business advocate.
Connect with Louisa on Linkedin.
Louisa Sanghera is a Credit Representative (437236) of Mortgage Specialists Pty Ltd (Australian Credit Licence No. 387025).
Disclaimer: This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information. This article is not to be used in place of professional advice, whether business, health or financial.
