Putting the property market 'dip' into perspective
Rising interest rates and inflationary pressures are impacting us on several fronts at the moment, but attention-grabbing headlines screaming about super-sized interest rates or imminent property market crashes are fuelling far more worry that is warranted in the current economic climate.
I’d like to dive into some hard statistics and talk a little bit about how the market is not falling as dramatically as the media would have us believe, especially when we take into account the truly phenomenal gains of the past few years.
The market is slowing...
There is no denying that we are entering a phase of downturn in the property cycle, signalled by a slowing in the growth of dwelling values and a gradual shift from the piping hot seller’s market of the past two years to a less vigorous run of sales activity in recent months as demand has weakened in some areas.
After the phenomenal boom of the past two years, a certain cooling is natural as the property cycle continues to turn. Some homeowners are noticing that their property value may have decreased by a few percent relative to the peak prices of late 2021, although this is not the case in every area, as we’ll see a little further on.
…but let’s look at the wider picture
Property is a long-term game, so it’s imperative to focus on month-by-month figures in a wider context.
If we do, we can see that in most cases, and certainly in many of the most sought-after suburbs and regions of Sydney and NSW, dwelling prices are still lightyears from where they were just 2 years ago despite having dipped slightly in the last quarter. In fact, in some areas, values are still rising, albeit less exponentially than before. Let me give you some hard figures from CoreLogic’s latest research data to support what I’m saying here.
The following table show how dramatically median house prices in several DiJones areas changed in the two years from the start of the pandemic. It then shows the most recent available figures from CoreLogic (July 2022), which is where we can see small dips in many areas, with some bucking the trend and showing signs of growth.
Figures expressed in AUD. Data from CoreLogic Suburb Reports retrieved August 2022.
It’s clear from these numbers that the property cycle has shifted, and that the madly ebullient market of the pandemic years is now slowing to a simmer in most areas. But if we look at the longer-term trends, we can really appreciate the enormous growth that we’ve experienced in the past two years, and understand that the recent dips are, by comparison, quite small.
What's the takeaway?
The property market has entered a natural phase of downturn after a period of meteoric upswing and we are seeing a corresponding slowdown in many markets throughout Sydney and across NSW. However, as the data shows, prices are not plummeting by any stretch of the imagination, and overall growth continues, albeit more slowly, in certain areas.
Buyers have started responding to rising interest rates, inflationary pressures, and a tighter lending environment. This has led to a weakening in demand and a drop in sales volumes across Sydney and NSW from the record highs of 2021. But again, the wider context shows that despite the weakening market, the number of national home sales is still 9.2% higher than the previous 5-year averages for this time of year 1, and as we move into spring, we are likely to see a seasonal increase in sales volumes, especially in areas of high demand.
In short, although the media is blaring about plunging prices and a potential collapse of the property market, the numbers tell a very different story. There are suburbs across our footprint that are still experiencing growth; and for those that have dipped slightly, the strong surges in value that we’ve seen over the past 2 years mean that homeowners are still a long way ahead. This is great for those planning to sell now or in the coming months, as they stand to benefit from some very tidy gains.
Other selling my house or apartment articles and resources
Selling a house or apartment in NSW eBook
How do I find out how much my property is worth?
Selling a property off-market, or discreetly - what is it and how does it work?
Selling a house or apartment in NSW FAQs
