Rates rise and times get tough.
The Australian property market has remained resilient despite a supply and demand deficit. In May, new listings were significantly lower than the monthly average of the past decade, leading to a decrease in the "months of supply" ratio.
However, investor behaviour differed from the overall listings trend. Investor listings in May were close to or higher than the monthly average of the previous decade, particularly in major cities like Sydney, Melbourne, and Perth.
Inner city areas, popular among multiple property owners, experienced a surge in investor listings. This suggests that while owner-occupiers hesitate to sell, investors actively participate in the market.
This situation poses challenges for owner-occupiers who may be discouraged from purchasing former investment properties due to long lease terms or concerns about maintenance. Nevertheless, buyers may have limited options due to limited supply and the need to consider investment properties. It's important to note that while investor listings have remained elevated and may be increasing, the overall share of investment listings is still lower than the peak observed in mid-2021 when the market experienced significant capital growth. During that period, the national CoreLogic Home Value index recorded an annual growth rate of 16.1%.
Move in together
According to Reserve Bank Governor Philip Lowe, renters facing the current crisis will find limited relief by increasing the number of people they live with. Lowe emphasised that rents will continue to rise, and the only way to alleviate the pressure is to have a higher average number of occupants per household.
The demand for shared living spaces is evident, as Flatmates.com.au reported its busiest month ever in May, with 69,400 new sign-ups. On the Gold Coast, hundreds of prospective flatmates actively seek housing, while the available listings need more than 1,200 options. Interestingly, it's not just young individuals leaving home for the first time who are searching for accommodation; the largest growing demographic on the website is members aged 45 to 65, experiencing a 10% increase in May.
The hottest tip to finding the next hotspot!
Many property investors look at changes in median house values to decipher whether the market is heating up. Median values are a lag indicator, so the data is around 3 months old.
A rise in sales volume is one of the best early indicators of a property market heating up in a particular area. Increasing sales means more demand is incoming.