From lock downs to inflation and everything in between, FY21/22 shaped up to be a wild ride for the property market and the year ahead promises more of the same volatility, though for different reasons.
This time last year saw the booming property market continue to build steam, with prices regularly eclipsed month by month and NSW and Victorian lockdowns seeing a continuous stream of southern buyers desperate to find a home in safer pastures – with what felt like record numbers of sight-unseen transactions and a mentality of securing a home at almost any price. Mind you, some of those prices which seemed over the odds at the time, ended up looking pretty good value just 6 months later – there was more than one home that resold inside of 6 months that turned a $100,000 profit.
2022 started with promise, with lockdowns behind us, the country opening up and tourism once again on the cards for Cairns. Southern buyers became a little less prominent as the urgency went out but local buyers certainly stepped up, with homes still rarely making it past their first or second open home. A European war, supply chain woes out of a locked down China and rampant inflation left their mark with confidence slipping slightly, but the demand for a roof to call their own remains trumps.
The election saw property affordability take centre stage, with the now new Government due to roll out significant first home buyer and low income assistance to get into housing. The RBA also put in their 2 cents (and 0.75%) to rein in inflation the way they used to make it (big).
Capital city markets are easing a little, but local demand remains high and interest rates are still below their long term averages. Buyers that went ALL IN will feel the pinch more than most but it’s the higher interest on top of everything else which is sharing the pain among virtually everyone.
Looking forward, it remains the case that the only thing stopping more homes from selling is having more homes to sell. Demand continues to outstrip supply and will only continue to do so for the next 6 months at least. Higher interest rates will mean those at the bottom of the market will have less budget (and choice) and at the higher end there will be fewer ready to hold two mortgages (buy next home before selling) but swift transactions should minimise that impact.
It's been far from boring, this year. I’m looking forward to what’s ahead.
Tom Quaid is the REIQ Zone Chair for Cairns