Spring Selling Season: Expectations and Market Trends
As we move into the spring selling season, vendors need to temper their price expectations. Dan White, the managing director of Ray White Group, highlights a crucial point: the property market is seeing an easing in price growth, with potential interest rate hikes on the horizon.
Property Price Trends
CoreLogic’s Daily Home Value Index reveals a slowdown in price growth across capital cities. The first 27 days of July saw a modest 0.4% increase, compared to 0.7% in June. Notably, Sydney home values rose by just 0.2%, down from 0.5% in June, while Melbourne experienced a decline of 0.4% in July, following a 0.2% fall in June.
Regional Performance
The smaller capital cities continue to lead in performance, though signs of moderation are evident:
Perth: Values increased by 1.8% in July after a 2% rise in June.
Adelaide: Home values grew by 1.6%, slightly down from 1.7% in June.
Brisbane (including the Gold Coast): Values went up by 1% in July, following a 1.2% rise in June.
Market Insights from Experts
Experts such as AMP’s chief economist Shane Oliver and Oxford Economics Australia’s senior economist Maree Kilroy predict a fall in house price growth to about 5% for this financial year, down from 8% in the previous year. The potential delay in rate cuts or additional hikes could lead to renewed property price declines, as buyers may hold back, increasing distressed listings.
Interest Rate Speculations
The Reserve Bank of Australia (RBA) is set to meet on August 6 to decide on interest rates, with the June quarter Consumer Price Index playing a pivotal role. According to Dr. Oliver, the RBA might refrain from hiking rates unless underlying inflation exceeds certain thresholds.
Auction Market Dynamics
Despite easing house prices, auction clearance rates have improved. CoreLogic recorded a 72.2% preliminary clearance rate across combined capital cities last week, though this was later revised down to 62%. Melbourne saw a preliminary clearance rate of 69.8%, up from 66.9%, while Sydney’s rate rose to 76.5% from 74.6%.
Standout Auctions
The strong demand for quality homes was evident in notable auction results:
A seven-bedroom home in Strathfield, Sydney, sold for $8.9 million, surpassing the pre-auction price guide by $1 million.
In Brunswick, Melbourne, a three-bedroom Victorian home fetched $1.89 million, $390,000 above the reserve, despite adverse weather conditions.
Market Challenges
Melbourne buyer’s agent David Morrell noted a significant lack of buyer engagement, describing this July as the quietest in 20 years. The usual transaction activity in June and July has been absent, with sellers hesitant to list properties ahead of spring.
As we approach the spring selling season, it’s clear that vendors must manage their expectations in a market characterised by moderate price growth and potential interest rate increases. While auction clearance rates suggest robust demand for quality homes, the overall market remains cautious and competitive. Monitoring these trends will be crucial for making informed decisions in the coming months.
