Australia’s Housing Values Increases!
Australia’s housing values have increased.
Australian housing values continued their recovery for the fourth month, as indicated by a 1.1% increase in CoreLogic's national Home Value Index (HVI) in June. Although this growth rate slightly slowed down from the 1.2% gain observed in May, the overall trend remains positive. Since reaching a low point in February, housing values have risen 3.4% nationwide. However, despite this recovery, the market still lags behind its peak levels recorded in April 2022, with a decline of 6.0%.
To put it in perspective, the median dwelling value in Australia is still $45,771, lower than the peak of $768,777. Except for Hobart, where there was a slight decrease of 0.3%, all capital cities experienced an increase in dwelling values in June.
Sydney remains at the forefront of this upward cycle, with home values rising by 1.7% in June. Since the January low, Sydney has witnessed a cumulative recovery of 6.7%. In terms of dollars, this translates to an approximate weekly increase of $4,262 in the median housing values in Sydney.
The limited availability of housing supply continues to be the primary factor contributing to the upward pressure on housing values in Australia.
Prices won't crash the Economy
Owners and investors in the Australian property market can be reassured that their properties are unlikely to experience significant declines in value even if the economy enters a recession. Historical data demonstrates that recessions have not resulted in massive drops in property prices. During the peak of the 1993 Recession and the 2007-2009 Global Financial Crisis, property prices only decreased by around 10%.
Despite consecutive interest rate increases, buyer enthusiasm remains strong, and many actively seek homes, leading to a supply shortage and driving up prices. According to Shane Oliver, the chief economist at AMP Capital, there is little evidence to suggest an impending crash in property prices if Australia experiences an economic downturn. While it is normal to witness price decreases during such periods, there is no substantial evidence of a property price crash in the post-war period, except for the extraordinary circumstances of the 1930s.
Property development tip
While developing residential real estate yourself is possible, the stakes are high. Experience goes a long way; you expose yourself to additional risks if you don’t have any. And sometimes you don’t know what you don’t know.
Having an experienced project manager to help would be a good idea. Yes, you will have to pay them, which means less profit for you, but mistakes can cost dearly in property development.
Another way to get experience with less risk is to partner (Joint Venture) or invest in a developer’s project who is willing to show you the ropes and pass on their experience during the project. This way, you can earn great returns and also learn along the way; earn and learn.
If earn and learn interests you, or even the earn part, reach out, and we can discuss how this could work for you.