Your Property News August 2022

We recently attended a very thought-provoking seminar discussing all things housing in the current economic climate.

Stephen Koukoulous – Managing Director of Market Economics delved into the facts of housing, consumer spending, property investment, interest rate and house prices.

What is protecting the Australian housing market at present is full employment. The best we have seen since 1974. Inflation is high however there are signs that some commodity prices are coming off their highs.

Stephen advised that those who entered the housing market over the last 2 years will feel the greatest impact from rising interest rates when compared to those that have been in their homes for some time – 5 plus years, having experienced similar interest rates as to today, saved during the pandemic and thus built-up reserves. Approximately a third of the lending market will be affected by the increase in rates whereas the remainder will weather the increases.

The below table was the standout of the presentation. The Oct 2009 to Nov 2010 figure isn’t positive, we had just experienced the Global Financial Crisis (GFC) which commenced mid-2007 and finished early 2009.

House Prices after the last interest rate rise

Rate Hiking Cycle	House Price change* One year after last hike	House Price change* Two years after last hike	House Price change* Five years after last hike
Oct 2009 to Nov 2010	-4.1%	-1.2%	26.1%
May 2002 to Mar 2008	-4.6%	12.7%	13.5%
Nov 1999 to Aug 2000	14.0%	33.7%	64.3%
Aug 1994 to Dec 1994	0.3%	2.0%	26.0%

*per cent change from time of first interest rate rise of the cycle. Using quarterly ABS data, slicing the new series to the old methodology at the September quarter 2003.

The old saying – short term pain for long term gain is certainly reflected in the above table. In 5 years time, where will property prices be? Will they follow the increases as in previous times?

Whilst building materials remain high and in short supply, and labour is fully employed coupled with a shortage of rental accommodation, our housing market will remain relatively strong. The number of buyers may reduce, time on market will increase, and distressed sales may increase, however the general consensus is that the housing market in Queensland will perform better than the Sydney and Melbourne markets.

As we always say – the right time to buy and sell, is when the time is right for YOU.

If you are looking to buy, invest or sell, please reach out as our door is always open – You are our focus.

Amanda
Amanda Butler – Principal
0438 767 439