We’re now three months into a return to price growth and with interest rates now possibly peaking, it looks like this growth will continue for at least the short term. Population growth continues to accelerate and the ongoing construction crisis is set to result in too few homes being built for many years to come.
Peak to trough declines ended up at 6.5 per cent, representing a fall that was far less dramatic than the extreme growth we saw through the pandemic. Right now it’s looking like we will be back to the pandemic peak in the second half of 2023. In places like Adelaide and Darwin, where prices barely moved last year, we’ll be back to peak by June.
Leading the way in the recovery are the suburbs that saw the biggest drops during the downturn, and the biggest increases in the pandemic. It includes suburbs like Manly and Mosman in Sydney, Dural in the north-west of Sydney and Cottesloe in Perth. All of these suburbs have seen prices increase by over $60,000 since December 2022.
What could change the outlook for price growth? There’s certainly less likelihood of further drops in prices than there was just three months ago, however the main risk factor is the large number of low fixed price mortgages being reset to variable rates. Ideally, households will be well prepared for this change, particularly given rates started rising 12 months ago.
This month we take a look at what is driving the faster than anticipated return to price growth and estimate when we will get back to the 2022 house price peaks in each capital city. For our commercial property insights, we investigate what’s happening to foreign investment. While we’ve seen a big fall in foreign investment in residential property, the declines have not been as extreme in commercial.
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