The housing market gets hotter with the weather, but this summer buyers are facing higher mortgage rates and ongoing cost of living pressures. An RMIT property expert explains the current housing market trends for homebuyers.
Topics: housing, RBA, cost of living, inflation, housing market, homeowners, first-homebuyers, housing demand, supply, NHFIC
Dr Peng Yew Wong, Senior lecturer in the School of Property, Construction and Project Management
"Spring and summer tend to be more popular months to sell (and therefore buy) homes. If you're looking to buy property, you may have noticed a lack of homes for sale during winter. Now that we've entered the warmer months, we are likely to see increased activity in the property market.
"This year we are experiencing a market trend not witnessed in Australia since the 2008 Global Financial Crisis.
"Instead of the much-anticipated downturn caused by high cost of living and high mortgage repayments, house prices continue to perform strongly – consistently registering positive growth since the beginning of 2023. CoreLogic housing data showed prices rose 0.8 per cent nationally in September 2023 and Australian house prices are expected to hit a new record high in the final quarter of 2023.
"This will present a difficult conundrum for homebuyers, and especially prospective first-homebuyers.
"Our past decade research findings show that the key drivers for the Australian housing market continue to evolve. Although foreign investment represented a significant housing market driver during the 2010s, it had little impact on house prices growth during the COVID-19 pandemic lockdown period. The significant hike experienced during the COVID-19 pandemic was instead driven by market liquidity and low interest rates during the period of expansionary monetary and fiscal policies in the nation.
"This year, the key driver for the housing market is undoubtedly the shortage in housing supply. The National Housing Finance and Investment Corporation (NHFIC) estimated that household demand in Australia will grow from 10.7 million to around 12.6 million in 2033 and showed housing supply is already in a shortfall condition, with the supply to household formation balance to be a cumulative negative, in the territory of a -106,300 balance over the next 5 years.
"House prices shall continue to go from strength-to-strength into 2024-25 in the midst of high inflationary pressure, due mainly to the housing supply shortage.
Dr Peng Yew Wong is a senior lecturer in the School of Property, Construction and Project Management at RMIT University. His key research efforts centre on exploring the key determinants in the Australian and global residential and commercial property markets.
