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Australia's Property Market Faces Supply Pressure but Continues to Rebound
Australia's Property Market Faces Supply Pressure but Continues to Rebound Sydney
By   Internet
  • City News
  • Australia
  • Property Market
  • Supply Pressure
Abstract: Australia's property market has seen a rebound with house prices rising by 8.4%. However, supply constraints continue to pose challenges for market stability and growth, particularly in the apartment segment.

Limited housing supply is one of the primary issues in the current market. Over the past six months, the average monthly approvals for residential housing have been 13,355, indicating a significant supply shortfall.


Notably, approvals for apartments have seen the most significant decline, with approvals in capital cities across states at their lowest levels in nearly five years, even falling below half of the peak in 2016. This suggests that apartment supply will remain constrained in the near future.


Australia is currently experiencing a record influx of overseas migration, with an expected net population increase of 715,000 people over the next two years. Many immigrants are choosing to start a new life in cities like Sydney and Melbourne, which is expected to be a significant driver of rising property prices and rents in these two cities. The surge in immigration, coupled with subdued residential construction, is exacerbating the issue of housing shortages in the market.


Buyers and sellers have gradually adapted to the new normal of rising interest rates, even amidst economic downturns, decreased household consumption, and a soft labor market.


Even if the Reserve Bank of Australia raises interest rates again, the impact on the market is expected to be relatively limited. This means that even with rising rates, demand for housing is unlikely to be significantly affected.


The supply-demand imbalance has led to a further upward trend in house prices. According to data from CoreLogic, the total number of properties listed for sale is 17.1% lower than the five-year average. Market demand remains higher than supply, with newly listed homes being quickly absorbed. This indicates that despite declining inflation, house prices are likely to continue breaking historic highs and see sustained growth over the next 18 months.


Looking ahead, the Reserve Bank of Australia expects to achieve its inflation target of 2% to 3% only by 2025. Therefore, the implementation of rate-cut policies may further fuel price increases if the Reserve Bank begins lowering rates next year.


In conclusion, Australia's property market has rebounded despite supply-demand imbalances. While supply constraints and other economic factors present challenges, the housing market is poised for continued growth over the next 18 months due to the immigration surge and adaptation to rising interest rates. However, it's crucial for the government and relevant authorities to closely monitor housing supply issues and take measures to ensure the market's sustainability and prevent excessive price fluctuations that could negatively impact the economy.

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Australia's Property Market Faces Supply Pressure but Continues to Rebound
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