Media Plus’ April 2022 Property Market Update
There were many factors influencing the property market in the first quarter of this year, from domestic and international borders reopening to rising inflation and the return of investors into the market.
Here, we will look at the overall impact this had, as well as the impact on the Victoria and Queensland markets specifically, where our clients are mostly located.
While the Brisbane market is strong, national housing growth is slowing
National housing values rose slightly in March by 0.7%, according to Core Logic’s April National Housing Market Update, representing a mixed bag of trends across the states and territories.
Brisbane was the strongest capital city in terms of housing value, rising by 2% over March, which is part of a larger trend as prices rose by 29.3% over the last 12 months. It’s a market where demand is exceeding supply, especially with the surge in population growth from interstate migration during the pandemic combined with international borders reopening.
Melbourne’s housing values, on the other hand, declined by a small margin (0.1%), in line with the negative trend of the last several months. With higher stock levels and less competition, the market looks to be slowly moving into buyers’ favour.
These trends have been reflected in REA statistics, where national enquiries have decreased in February, while new listings (for both new and established stock) rose by 27.8% in the same month.
Overall, it looks like housing growth rates are slowing down across the board, most likely due to the prospect of higher mortgage interest rates and the increasing gap between incomes and rising inflation.
Quarterly change in dwelling values, cyclical peak vs March 2022 – Core Logic
The rental market is bouncing back from the impacts of the pandemic
After the spike in available rentals during the Covid-19 pandemic, vacancy rates are now falling, with the national vacancy rate sitting at 1% as of March 2022, according to Domain’s latest Vacancy Report.
This is the third month in a row that’s recorded a decline, showing an ongoing trend where the rental market is moving towards landlords’ favour.
Monthly vacancy rates across Australia and capital cities – Domain
Melbourne’s rental market has recovered after suffering the most from harsh lockdowns and closed borders, fuelled by their reopening and the return of international students. Its vacancy rate has dropped from 4.3% in March last year to 1.8% in March this year, with unit rents rising almost four times faster than houses over the last quarter.
Meanwhile Brisbane is seeing its strongest rental market yet, with house rents and unit rents both at record highs ($500 and $430 per week respectively). It has seen the highest population growth out of all states in recent months, with demand exceeding supply. We’ve seen the effects of this ourselves in the speed at which our clients’ Queensland developments are selling.
With the market picking up again, investor activity has increased, with REA reporting a 12% increase in investors looking at new properties during the month of February; while first home buyers dropped by 9% that month, likely linked to fewer incentives available for them.
What’s next?
Overall, the market is leaning towards the favour of buyers and investors. As the federal election is set for next month, there’s a chance we could see the implementation of new financial incentives to help aspiring home buyers enter the market. We could also have a better idea of when we can expect the next interest rate rise, which is likely to slow housing growth rates even further.