Great news for property owners in Sydney and Melbourne! According to leading property data analysts, the housing price downturn has ended, and the market has hit bottom. CoreLogic, SQM Research, Proptrack, and RBC Capital Markets have all called the bottom of the two largest housing markets in Australia, citing several housing indicators showing a marked upturn. The return of migrants to the cities has played a significant role in boosting demand, far outstripping supply. Although some housing economists believe that prices may still fall further, even they acknowledge that the faster than expected return of immigration after the pandemic will underpin the housing market. Sydney prices fell by 14% peak-to-trough, and Melbourne slumped by 9.8%, lower than many economists’ forecasts. According to CoreLogic, national home values have dropped by 9.4% peak-to-trough, which is the largest housing market downswing on record, but it is still significantly lower than the average forecast of a 15% decline. Moreover, March data indicates that the housing market is bouncing back, especially in the higher end of Sydney and Melbourne. Sales volumes also increased by 10.4% month-on-month in March, with a strong recovery trend in the top 25% of home values across the capital cities. The upswing in the market is expected to continue as consumer sentiment bounced back by 9.4% in April, according to Westpac. Investment bank RBC Capital Markets has also called the bottom for house prices and said an upswing was underway. RBC Capital Markets analysts predicted that nationwide house prices in Australia appear likely to trough in the second quarter of 2023, around one quarter earlier than they had previously expected. While the International Monetary Fund identified Australia as one of the six advanced economies with the highest level of housing market risk, the buildup of medium-term vulnerabilities warrants close monitoring and potentially policy intervention, as further declines could weigh on the economic outlook. However, these warnings are not expected to detract from the positive news for the property market in Sydney and Melbourne.
Source: AFR