The latest RP Data Market Update provides a mixed bag of data, with both good news and bad news for Australia’s property market.
BY PETER KOULIZOS
Reading some of the newspapers or watching the evening news, you’d most certainly be excused for thinking that Australia was in an economic recession. Much of what we hear in the media is doom and gloom; rarely is there a positive story about the property market nowadays. However, when you dig a little deeper, you can also find some very positive news, which can give us a little bit more confidence in the market.
Yes, it may sound strange, but there definitely is positive news out there!
First, the bad news.?
- Canberra was the only capital city in Australia where property prices increased during the three months to April (and that was by a miserly 0.8 per cent).
- The number of properties selling is well below the five-year average.
The average time taken to sell a house has increased from 41 days last year to 55 days.
- The average time taken to sell a unit has increased from 36 days last year to 51 days – that’s an increase of over 40 per cent!
- Vendors have to drop their asking prices for their houses more than they did last year; from a discount of five per cent to 6.5 per cent.
- Vendors have to drop the asking prices for their units more than they did last year; from a discount of 4.5 per cent to 6.5 per cent.
- The number of properties currently on the market are at almost all-time highs – there are 280,000 properties currently for sale!
Auction clearance rates have been trending downwards since the beginning of the year.
Consumer confidence is dropping.
Now for the good news!
- Rents are increasing.
- Inflation is currently under control.
- Standard variable rates are below the 30-year average.
- Unemployment is almost at record lows.
- There are more full-time jobs being created compared to part-time jobs.
Even though I’ve outlined almost twice as many points for the bad news as the good news, the thing to remember is that the most vital news is good. That is: inflation is under control, interest rates are relatively low and most importantly, the job outlook is very good and getting even better.
At the moment there’s some pressure on inflation but if we continue to save our money and not spend as much, the pressure on interest rates will ease. Interest rates will probably go up sooner rather than later but when you put everything into perspective, a 25 basis point increase will put more pressure on household budgets but it won’t cause a catastrophe. Why? Because we have jobs that are secure and our wages are increasing.
Despite what you may read or hear in the media, all is not lost. Yes, property prices are dropping, but don’t expect them to drop for too much longer.
What do you think about the outlook for the property market? Is an upward swing just around the corner?
Peter Koulizos is a property educator at UniSA and TAFE and the author of The Property Professor’s Top Australian Suburbs – a guide to Australia’s top suburbs for property investors and homebuyers, available from www.businessmall.com.au