Herron Todd White: Buyers tipping rate cuts drive activity


The expectation that interest rates were set to fall was behind this year’s uptick in activity, according to the latest Herron Todd White (HTW) Month in Review.

In the May report, HTW Head of Group Risk and Compliance, Kevin Brogan, said the first quarter of the year generally saw an increase in market activity due to a growing perception that the next cash rate change would be downwards.

“An increase in buyer activity was observed as purchasers moved to get in early before any anticipated interest rate cut placed upward pressure on residential property prices,” Mr Brogan said.

He said now that it appears interest rates will be higher for longer, market sentiment might change.

Mr Brogan said across the country, there were notable differences in the performance of various state markets.

“Brisbane, Adelaide and Perth all have record high median dwelling prices,” Mr Brogan said.

“Of the other capital cities, where values peaked in the first half of 2022, Sydney’s median dwelling price is closest to the record high, followed by Canberra and Hobart.” 

He said the residential property market in Tasmania had been the most significantly affected by interest rate increases. 

“A surge in interest in Tasmanian residential real estate from interstate purchasers was influenced by the context of Covid and resulted in a significant increase in dwelling prices that set a benchmark that remains well above the current median dwelling price,” he said.

“Darwin is set apart from the other capital cities as its market peak was all the way back in 2014 and dwelling prices are still generally well below that level. 

“The regional markets in each state have broadly followed a similar pattern to their respective capital cities over the past twelve months, noting that the overall increase in dwelling values is slightly lower.”

Source: HTW

Sydney

HTW Director, Shaun Thomas, said median value growth across Sydney slowed in the second half of 2023 and had levelled off by the end of the year.

“There has been an increasing trend again to start 2024,” Mr Thomas said.

“The median house price is up 0.9 per cent since the start of the year to $1,414,229. 

“Units have started 2024 marginally better, up one per cent to $839,344.”

Melbourne

HTW Director, Perron King, said Melbourne’s market had a mixed start to the year.

He said some unit markets offered strong yields, however, their growth potential was less than the housing market.

Mr King said some areas, such as Clayton, had seen house prices rise modestly in the past 12 months, while rents had surged 17 per cent.

Brisbane

HTW Director, David Notley, said Brisbane was shining on the property front as the year progressed. 

“Demand is robust and listings tight,” Mr Notley said.

“For property with the right fundamentals, we’ve seen spirited sales results.” 

He said Brisbane house prices had risen 3.1 per cent in three months and 16.1 per cent in the past 12 months. 

“Brisbane is positioned in the top three locations for growth across all capital cities for both timeframes,” he said.

“Of course, this demonstrates the challenge for buyers. 

“Fast rising markets make it difficult to get a foot in the door. 

“Bigger deposits are required, and you must be ready to act fast if you find a home that meets your needs.”

Adelaide

HTW Valuer, Nick Smerdon, said a new median house price record of $740,000 was set in the December quarter of 2023 in Adelaide. 

“Since then, CoreLogic’s Hedonic Price Index has indicated the market has grown strongly in the first quarter of 2024,” Mr Smerdon said.

“It’s expected that a new median house price record will be set in the first quarter of 2024.”

Perth

HTW Director, Chris Hinchliffe, said property prices in Western Australia were generally going from strength to strength.

He said many renters had entered the market after becoming frustrated with the lack of options and tough conditions.

Darwin

HTW Valuer, Megan Cornish, said Darwin is a solid choice when considering value for money, offering the perks of a capital city and an appealing lifestyle. 

“After watching other capital cities surge in value, the affordability level of Darwin becomes obvious with a median house price of $560,000 and $405,000 for units,” Ms Cornish said.

“The city has suitable options for families, empty nesters and first homeowners under the median house price and continues to be an attractive lifestyle choice for many.”

Canberra

HTW Assistant Valuer, Thomas Atlee, said Canberra has a median house price of $1,049,719, a one per cent increase from the December 2023 quarter, leaving the capital with the second highest median house price in Australia behind Sydney.

“Despite median dwelling prices falling in recent years, Canberra’s dwelling prices are well above pre-pandemic levels,” Mr Atlee said.

Hobart

HTW Valuer, Mark Davies, said residential property values have softened in the greater Hobart and surrounding areas due to increased stock levels and elevated interest rates.

“As for where to buy, the choice is bountiful at the moment with high levels of stock listed for sale and price reductions generally occurring during each individual marketing campaign,” Mr Davies said.



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