November saw the 7th month of national house prices falling off the back of increasing interest rates and high levels of inflation.
The rate of decline is easing and with low levels of stock on the market and buyers continuing to purchase even as interest rates increase.
Although on average house prices retracted approximately 1% across the country. The lowest average drop since June this year.
Melbourne fell 0.8% and Sydney 1.3% in November, with these two markets having been hardest hit by declining prices, losing 7.0% and 10.6% respectively since November 2021.
Brisbane has fared better and even though it saw a 2% drop in November it has seen an increase in average house prices of 3.3% since November 2021. Brisbane is up 35.4% since the beginning of the pandemic.
Perth’s house prices remained steady in November and have managed to see positive growth through the current market conditions, with average house prices up 3.9% year on year.
Hobart and Canberra have also seen a year-on-year decline with Hobart at 4.1% and 1.3% at Canberra.
Two markets that have seen positive growth year-on-year increases are Darwin's 5.5% and Adelaide's 13.4%.
Darwin was the only capital that saw a retraction in median house prices during the covid pandemic and has a low volume of turnover, and as such these gains are on the back of a lower base price. Adelaide also has had very low levels of stock available and as such demand for property is assisting in raising the median prices.
CoreLogic Australia – National Home Value Index November 2022
It’s not all doom and gloom, median house prices are still up 17% on pre covid levels nationally.
What are the predictions for 2023?
It will largely depend on what the reserve bank does. Every interest rate rise reduces the amount that people can borrow.
The markets that are likely to do better throughout this period are those with greater affordability such as Brisbane, Perth and Adelaide.
With increased interest rates we have also seen an increase in rental yields for properties across the country. Investors generally fair better than owner-occupiers through increased interest rates as they can offset the costs of the property with rental income.
Now more than ever it is important to ensure you are investing in property that has a strong rental yield. Meridian Australia’s in-depth analysis model takes this into account alongside an extensive list of economic data, to ensure you are purchasing the right property, in the right location and at the right time.
Looking to invest in property?
When looking to invest in property, it's important to consider purchasing in an area that has a diverse range of employment opportunities and good connectivity to city centres. This is because such areas tend to be more attractive to potential buyers and renters, which can help to drive up demand and prices.
Another factor to consider when choosing an area to invest in is affordability. Areas that offer a high level of affordability, particularly for those looking to upgrade or downgrade their home, are likely to remain attractive to potential buyers and renters.
At the same time, it's also important to consider the supply of properties in a particular area. Areas with limited supply pipelines are likely to see upward pressure on both asking rents and property prices, as demand outstrips supply.
Next steps
In conclusion, when looking to invest in property, it's important to consider purchasing in an area that offers a diverse range of employment opportunities, good connectivity to city centres, and a high level of affordability. Also ensures that population growth is trending upward and is likely to continue.
Tim Davis - Property Investment Consultant at Meridian Australia
P: (02) 9939 3249
Disclaimer: When considering purchasing a property, it's always prudent to seek the advice of an appropriately qualified professional to determine which strategy is most appropriate for your circumstance.
References
[1] Corelogic November 2022 - CoreLogic Home Value Index: National dwelling values fell - 1.0% in November, the smallest monthly decline since June
[2] ABC News - Australian house prices fall seven months in a row but the pace of decline slows