It's no secret that the housing market has taken a drastic turn in the past two years, with unprecedented prices across the country. At the end of 2021, prospective homebuyers were crossing their fingers and hoping the industry would be more forgiving in 2022. The combination of a global pandemic, supply chain disruptions and increasing inflation worldwide have all contributed to the current state of the housing market. So are house prices really expected to fall in the coming years? Let's take a brief look at the reality of the situation.
According to the Australian Bureau of Statistics, residential property prices increased 23.7% in 2021. While those who were in the market to sell their current home had a relatively easy time getting the real estate off their hands, it was more difficult to get into another house. Data shows that house prices in some Gold Coast suburbs have increased by over 50% in price during the last quarter of 2021, impacting surrounding areas in a similar manner.
The housing market grew based on several factors. Some of the influences included increasing demand paired with relatively low supply. Contractors could not keep up with the demand by building new structures due to supply shortages and disruption in the supply chain, both of which made it difficult to obtain high-quality building materials.
But what about the future? Some are expecting the market to cool as some of the contributing factors loosen.
For context, the Australian housing market increased 22% overall in 2021, according to Westpac. Realestate.com reported that this was the third sharpest increase since 1880. However, this year, they predict that prices will begin to fall. This forecast is also backed up by Commonwealth Bank and ANZ.
All three banks report that prices are likely to fall at least 3% from the current going market rates as we move into 2023. This is good news for those who have been waiting for housing prices to cater to buyers more than sellers. The past few years have been decidedly a seller's market, but that is coming to an end in the near future. Home prices will at least become a little more manageable and moderate. According to Commonwealth Bank, the rest of this year will have a housing market that is based on "higher fixed mortgage rates, affordability constraints, and natural fatigue after a period of extraordinary price gains."
To learn more about what the market has to offer for someone looking to buy a home, reach out to Ray White Surfers Paradise today.