As some experts predicted, the global housing boom that began at the cusp of the COVID-19 pandemic is gradually slowing down. However, there are still things to be learned from the price movements in the market, both in Australia and abroad.
The PropTrack Home Price Index (HPI) just came out this month, and it’s showing some interesting price trends in the housing market.
The overall gist is that price growth has slowed down, but how the prices are slowing down differs between sub-markets. In the suburbs, we see the much-expected plateau effect, but prices are still somewhat on the rise in other areas. So, those looking to get into the action before the bubble pops may want to look into those areas.
Here’s what the different charts from HPI show:
The year 2021 saw unprecedented price growth of 25 per cent, which was the highest in 30 years. However, in 2022, the growth rate has come down to 18 per cent. Nevertheless, some may argue that the rate is still high, and they are not wrong.
In terms of monthly growth, home prices registered an increase of just 0.3 per cent — the slowest rate since May 2020.
Major metropolitan areas like Melbourne and Sydney are also seeing price drops.
It’s no surprise that regional areas and towns outside of capital cities in Australia are still showing high prices. However, since the pandemic hit, cities have had an outward movement, explaining the widening gap between price growth rates.
The real estate market saw house prices and demand grow faster than units. Again, the pandemic played a significant role in this trend as units in downtowns of major cities became less desirable, with work from home and social life as we know it upended.
As of March 2022, the growth rate difference between houses and units stands at 10.2 percentage points. The highest difference was 14.2 percentage points in November 2021.
This difference will likely reduce further in the year as cities open fully and welcome tourists.
Overall, the price growth has slowed down across Australia. However, Brisbane, Adelaide, and South Australia are generally exceptions.
If we look at the annual price growth rate from March 2022, the fastest price growth regions are concentrated in New South Wales and Southeast Queensland.
If there’s one thing we can gather from the charts and trends from the latest HPI, home prices in Australia are losing steam after months of rapid growth. However, some regions are still hot for investors, especially those away from cities.
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