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Uh oh, I’m going to take a more serious tone boys and girls, because it looks like Australia’s property boom which has been ongoing since COVID, is finally winding down.
I say this because the latest Home Value Index from Corelogic caught my eye:
From here, you can see that overall dwelling values eeked out a tiny 0.1% gain in November, the weakest result since January 2023.
Even the big hitters like Perth, Radelaide and Brisvegas have been sluggish.
The falls are even greater in our two majors of Sydney and Melbourne.
I had posted about the previous months figures here, but it sure looks like the great cruise liner that is the property market is finally, finally about to slow down.
There’s probably a couple of reasons for this…
Rate cuts… or not?
One of the key factors influencing the slowdown is the reduced expectation of interest rate cuts, at least for the short term.
Everyone’s prediction of rate cuts seem to be pushed further and further away – and with an election year in 2025, it’s unlikely (in my opinion) that we will see a rate cut until then. This is because the RBA, although meant to not be influenced by politics, most likely wants to remain impartial (a rate cut might be supportive of the ruling party as it typically stimulates the economy).
ANZ recently pushed back its forecast for a rate cut from February to May 2025, which dampened buyer expectations. A rate cut could boost property prices, but without one, affordability remains a challenge, especially when servicing your debt or trying to obtain a loan.
That’s why, with term deposit rates quite high (can still get about 5% at some places) people who would have bought, are just saving their er savings at the bank.
More listings
Listings are on the rise, giving buyers more options, pure and simple.
Unit and house listings have increased by 16% since the end of winter this year.
Perth and Radelaide have seen the largest increases in listings, although these markets still have relatively low stock levels.
Sydney and Melbourne are also experiencing higher listings, tracking above their five-year averages, reaching the highest levels since 2018.
It’s basic econ 101 – demand vs supply peeps.
If supply increases and demand remains the same or is dropping – then prices start to fall ceterus paribus.
(Oh how I lurve that phrase, it means “all other things being equal” and I always used to put in my uni assignments – if Susan is a 9 and John is a 6, and Mike 9, Randal 8 and Samson 7.5 comes along then the probability of Susan NOT going out with John is high, ceterus paribus).
Where to from here?
Well, the future for 2025 is anyone’s guess.
But I’m not anyone, so here’s my guess.
I think yes the property market is definitely slowing down, and probably not even an interest rate cut or two will change this in the short term.
However there’s still a shitload of support for the market to prevent it dropping too much.
We still have a chronic housing undersupply, record numbers of immigration and a strong labor market to prop it up should it fall significantly.
Couple that with a rate cut or two… and again there’s an abundance of support for prices to level off.
Would you buy?
Ummm… not really no, I’ve said before, now is the time to cash up and prepare for your next purchase, there really isn’t much hurry in rushing in right now.
And besides there’s some other pockets of the investment arc which might be worth a sniff at?
What? Did someone say bitcoin and crypto? Bitcoin breached $100k? WHOAAAAaaaaa
*Editor’s Note: Yes, bitcoin did punch through $100k but again, sigh, please please do extreme due diligence when wading in cryptocurrency.
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P.S. Every post is the personal opinion of yours truly, please seek your own personal financial advice regarding your own personal circumstances.
