The Tale of National Property Prices Explained
Despite all the media doom and gloom, predicting that the Australian housing market would tank in 2023, national property prices rose ever-so-slightly in February. So, what is going on?
Property Price Trends
You may have heard it has been a bit of a buyer’s market in recent times. Over the past 12 months, property prices were down 7.2%, the biggest annual drop since May 2019.
However, recent data shows things may be starting to turn. A ProTrack analysis shows that Australian property prices actually rose by 0.18% in February 2023. And here’s why…
Impact of Housing Supply
This may just be a blip… listing volumes can experience seasonal fluctuations and if supply increases again, prices may drop back down. But it just goes to show how hard the market is to predict. And those who are holding out on buying until the market drops further might want to start preparing their finances sooner rather than later.
Impact of Interest Rates
Why were national property prices expected to drop in 2023? And why did they still fall? Well, successive rate rises have seen the RBA’s official cash rate hit 3.35%, up from 0.10% in May 2022. And in a recent statement, RBA governor, Philip Lowe announced the Board expects more rate hikes for 2023.
As interest rates rise, so too do mortgage repayments, which means buyers are unable to borrow as much, leading to downward pressure on property prices. But as we have seen in February, other factors, such as the number of homes available to buy, can counteract that downward pressure. Seeking advice from a mortgage broker during such market changes can provide valuable insights.
Why did national property prices rise slightly in February 2023 despite predictions of a market downturn?
Despite the media predicting a downturn in the Australian housing market for 2023, national property prices actually rose by 0.18% in February 2023. Various factors, such as housing supply and interest rates, play a role in these fluctuations.
How have property prices trended over the past year?
Over the past 12 months, property prices were down by 7.2%, marking the biggest annual drop since May 2019. However, recent data suggests that the market may be starting to turn.
What impact does housing supply have on property prices?
Listing volumes can experience seasonal fluctuations, affecting property prices. If supply increases, prices may drop, but as seen in February 2023, other factors can counteract this downward pressure.
How do interest rates affect property prices?
Successive rate rises have led to an increase in the RBA’s official cash rate, affecting mortgage repayments. As interest rates rise, buyers are unable to borrow as much, leading to downward pressure on property prices.
What should potential buyers consider given the current market conditions?
Those holding out on buying until the market drops further might want to start preparing their finances sooner rather than later. Various factors can influence property prices, making it hard to predict the perfect time to buy.
Have a Chat with Us
Keeping your finger on the pulse of the property market is tough enough, let alone finding the right home loan, organising your finances, and navigating the application process… buying a home can feel like a full-time job in itself! But we are here to help. We can use our network of lenders to find the right home loan for you, so that you can focus on fining your new home.
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.
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.