According to CoreLogic director of research, Tim Lawless, the increase in housing values in March can be attributed to a combination of factors, including low stock levels, high demand from immigration, and a tight rental supply. Advertised properties have been below average since September last year, with capital city listing numbers ending March almost 20% below the previous fiveyear average. With rental markets this tight, it’s also causing some people to consider buying instead, but high mortgage rates could prevent some from qualifying for a loan. Similarly, with net overseas migration at record levels and rising, there is a chance more permanent or long-term migrants who can afford to, will skip the rental phase and fast track to purchasing a home due to the difficulties finding rental accommodation. While population growth and a housing shortage are the major drivers of price increases right now, it is also likely that we are now at the peak of the interest rate cycle. Breaking the cycle of consecutive cash rate increases, the Reserve Bank of Australia (RBA) elected to pause the cash rate at 3.60% at its April meeting, driven by a greater than expected fall in inflation, and consumer spending suggested that previous hikes were finally having the desired effect. Even if there are further interest rate rises, this pause has given confidence that the end of the rate hike cycle is in sight, with subsequent optimism that rates may soon fall again. This renews the impetus for property price growth to continue for the remainder of the year. Like every downturn, we have seen prices fall far less than what is generally predicted. Housing markets almost always surprise with strength on the upside and see far less robust declines when the market turns. Andrew Macdonald, Principal | Ray White Macdonald Partners
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