Property experts name spring market winners and losers

Spring is finally here, but with a property downturn playing on confidence, just what will the market look like during this year’s peak selling season?

Ray White chief economist Nerida Conisbee says much will depend on whether we see an interest rate hike to kick off the season.

BUYER DEMAND

Buyers have been sitting on the sidelines due to uncertainty around interest rates and falling property prices – a trend that will probably continue if interest rates rise later this month, she said.

“If we don’t see a hike in September and if it looks like we won’t see another for the rest of the year, I think they will start to come back,” she says.

McGrath Estate Agents founder and CEO John McGrath says buyers are already starting to return to the market due to an increase in confidence.

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“Many buyers feel that the market has reached the bottom of the price correction and their window of opportunity to buy at these levels is probably around 6-12 months,” he says.

LISTINGS ON THE RISE

McGrath says listings are also on the rise with vendors starting to adjust their pricing expectations.

“At this stage we have not seen many distressed sales under pressure, thankfully, as lenders work closely with their customers to find a path forward,” he says.

Conisbee says while there will be an increase in listings over spring, it won’t be as strong a lift as what is generally seen in stronger spring markets.

THIS YEAR VS LAST

A range of economic factors shapes the difference between this year’s and last year’s spring markets, Conisbee says.

“Last spring, we were in an environment where interest rates had been cut three times,” she says. “This year, we’ve had three interest rate rises, we’ve had conflict in the Middle East, we’ve had very low levels of business and consumer sentiment. We’ve had the budget, which has really knocked about investors’ view of housing. We’ve also had Bathla go into administration.”

She pointed to high August inflation readings as another factor.

“So we’re in a vastly different market compared to where we were last year,” she says.

WINNERS AND LOSERS

Conisbee says she expects the more affordable end of the market, which has traditionally been favoured by first home buyers and investors alike, to perform more slowly over spring, while the top end of the market could do comparatively better. She says the capitals, especially Sydney and Melbourne, will likely continue to experience falls.

Beyond spring, McGrath has an optimistic view for the next 12 months.

“Melbourne is the market likely to enjoy the best growth over the next 12 months as it is well undervalued historically and provides the best value for money on the East Coast,” he says. “Sydney is traditionally the first market to correct and the first market to recover so 2027 should be a good market for Sydneysiders. And South-East Queensland, while there will be fluctuations, should see good growth right through to the Olympics.”

He says he doesn’t foresee many losers, though “Perth has been running hard for a long time and is due for a breather.”

END OF THE DOWNTURN?

McGrath says if interest rates stay on hold and war in the Middle East resolves, the downturn could be on the way out very soon.

“I think in most markets prices have bottomed out price wise and I suspect we will see a stabilisation in the second half of the year,” he says.

However, Conisbee points to the uncertainty still plaguing the market.

“Ideally, we’ll only see three more months of falls and then things will start to stabilise. But again, at this point, it’s very uncertain because I think people are just trying to figure out exactly what’s happening in the market,” she says.

BUYERS AND SELLERS

There are clear opportunities for both buyers and sellers in the next three months, McGrath says.

“If I was a buyer I’d be looking to secure something by Christmas as the best buys may occur over the next five months as listing levels increase before the confidence returns,” he says. “Most sellers are also buying once they sell. So, for most people not much has changed and the transaction gap remains the same as it was a year ago.

“But as I said, the best buying may occur between now and Christmas so it may be a good time to upgrade now if you can secure a sale on your own home over the next two months.”

Conisbee also says sellers can benefit from the slower market, even if it is a buyer’s market, because it gives them time to find a new home after selling.

The only downside is that there isn’t as much stock to choose from as there usually is in spring, she says.

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