It’s no secret that house prices across Australia have surged at a significant rate since the COVID-19 pandemic in 2020. Nationally, dwelling prices have increased by 59%, with major cities such as Sydney, Melbourne and Brisbane experiencing substantial growth rates. Sydney saw nearly a 50% increase, Melbourne almost 23%, and Brisbane an impressive 73%.
Data source: SQM Research
Although there was a slight dip in May 2022, coinciding with the RBA beginning its rate increases, the market picked up again by December 2022 during the spring selling period.
What does the future of house prices look like?
According to Nicola Powell, Domain’s Chief of Research, the main drivers of property price increases are population growth, construction challenges, and borrowing power. With house prices rising, it is forecasted that prices will increase further by the end of the year. This is influenced by the stage 3 tax cuts effective from 1 July, resulting in more disposable income for households and increased borrowing capacity, which will drive up house prices.
Implications of price increases
Are these price increases a good or bad thing?
From an investment perspective, the current upswing in house prices presents opportunities. Whether you’re looking to generate rental income or build long-term wealth, investing in real estate can be a smart financial move; and the current market conditions are presenting a unique set of opportunities for people who are thinking of investing. Australia’s high demand for property, driven by an influx of immigrants, is expected to surpass supply. This has led to a rental crisis, with not enough properties available for rent. There are plenty of opportunities for those who are well-positioned to take advantage of them.
Investment strategy
When considering investment properties, analysing data trends is crucial. These trends provide insights into price directions and the impact on investment properties. They also highlight areas where investing will yield better long-term value. With stage 3 tax cuts and increased house prices, it may be worthwhile to get your property valued. This could unlock equity, which, combined with disposable income, can be used for purchasing new properties, renovations, or building granny flats.
National weekly asking property prices
A review of the national weekly asking property prices from early 2020 to June 2024 shows a consistent upward trend. This data is essential for understanding the market dynamics and making informed investment decisions.
Data Source: SQM Research
The Australian market is constantly changing. Our brokers are dedicated to helping individuals discover the full potential of their assets to grow wealth and achieve financial goals. By staying informed and proactive, you can take advantage of the current market trends and make strategic decisions for your financial journey.
Disclaimer
Any information provided herein is of a general nature only. No consideration has been taken into your objectives, needs or financial situation. Before acting on this information you should consider if it is appropriate for your situation.