Australian property market starting to cool

Australian property market starting to cool

Australian property market starting to cool

Even though experts have predicted a cooling of the Australian property market time and time again over the last 12 months or so, there are definitive signs that demand is waning and prices are not moving ahead strongly. The RP Data-Rismark figures for the month of April show a national increase in property prices of just 0.3% which is a significant fall from the 2.3% seen in March. While this is a significant drop over one month it would be dangerous to assume that a new trend has been created on two individual statistics.

It was interesting to note that the vast majority of state capital cities across Australia still registered an increase in property prices, although there were falls in Melbourne (down 0.5%) and Canberra (down 1.1%). So what can we expect for the remainder of 2014? Are we indeed moving into a new phase for the Australian real estate market?

Reduced price rises

The term “reduced price rises” perfectly illustrates the fact that while we are seeing a softening of demand for Australian real estate there was still a general increase in prices. The 0.3% average increase across the country in April 2014 is actually a welcome reduction from the previous month’s 2.3% rise. It illustrates perfectly that growing concern about relatively high property prices in some areas of Australia is finally beginning to filter through into the marketplace – resulting in more sensible investment strategies?

Quote from : “I was thinking about any creative ideas to make my property more appealing to wide range of buyers. Any suggestions?”

Of the state capitals it was Brisbane which registered the largest increase in property prices with a 1.1% rise in April while Sydney, having gained 2.8% the previous month, saw this rate fall to 0.5%. This is the smallest monthly gain in the cost of Sydney property since June 2013 when the market rally began.

Is this the peak of the Australian real estate market?

Whether or not we will see an actual reduction in the cost of property across Australia is very debatable but it does seem as though demand and supply are now more balanced than they have been for some time. Let us not forget that Australia has been one of the best performing economies of the last decade having shown extreme resilience to the 2008 US mortgage crisis induced downturn.

Experts have time and time again called the top of the market only to be forced to swallow their words and admit that the market was going from strength to strength. This softening of price rises during the month of April could indeed prove to be a turning point but it is unlikely that we’ll see a reduction in property prices. While the influence of the mining industry across Australia is still relatively high, it will tail off as new project announcements continue to fall, this could take some of the steam out of local property markets.

Or is this just a seasonal move?

One opinion among some Australian real estate experts is that the month of April is one of the “softer” parts of the year where demand naturally falls and prices struggle to push ahead strongly. When you bear in mind the extreme strength in Australian real estate of late, and most notably the state capitals, perhaps a softer seasonally adjusted month was always going to result in a more headline grabbing fall in the growth rate?

2 Responses to “Australian property market starting to cool”

  1. Interesting to note, houses in the north Narrabeen, elanora heights area passed in at the weekend, one was on for offers over 980K is now back on the market at 1075K; just glad I didn’t pay for a building inspection on that one!!

    This seems to be a trend in the northern beaches houses being passed in at auction – fear of missing out still a great tactic to use by agents (strange to note that these passed in ones even failed to make it to print) in the news on auction results available on the web.. I assume this must be a timing issue.

    Happy house hunting, the slow down is well and truly here, 3 months and it will be a buyers market (I wish).


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