Buyer Confidence or Caution? What's happening in the market? - May Market Update

By Rich Harvey, CEO & Founder, propertybuyer

Written by: Rich Harvey, CEO & Founder

propertybuyer.com.au

The property market started very positively in 2024 with strong expectations of potentially two or three interest rate cuts as everyone got back to work in late January. Buyers were out in force trying to catch the early worm and their mindset was to get ahead of the buying pack before the market resurges.

However, recent economic news of stickier than expected inflation is throwing cold water on the idea of multiple rate cuts this year, which is creating significant buyer caution in some areas.

This month I take a quick pulse check of the market from our team on the ground in key locations. There’s a mixed bag of feelings out there amongst the buyer pool! Plus we look at the latest median capital city prices.

Sydney prices have increased 11.1% YTD due to a continual lack of stock, surging migration and low rental vacancies. The Sydney median house price is now $1.62m (compared to $1.46m a year ago).

Some agents are reporting only seeing a handful of genuine bidders at auction that are willing to extend past the reserve price that their ambitious vendors have set. At auction it appears that the buyers are pulling the handbrake on a lot faster than usual because they're hitting their borrowing capacity limit. In private treaty negotiations, agents are reporting that the best offers are typically coming in the first or second week, and then there seems to be a drop in the number of enquiries. And agents are sometimes struggling to get higher offers from subsequent buyers…which means that the property is staying on the market a little bit longer than usual.

In Sydney’s prestigious Eastern suburbs, Munro Donen, Principal of Propertybuyer East, is seeing very high demand for luxury properties in the $5m to $10m range. Prestige houses in Bellevue Hill, Rose Bay, Double Bay and Woollahra are highly sort after and seeing at least 20 groups through each inspection. Some local agents have sold all their stock and are scraping the barrel for listings which is quite unusual. In the high-rise apartment market, prices have levelled off giving investors and first home buyers a chance to get in.

Matt Corbett, Principal Buyers Advocate for Sydney’s Northern Beaches has described buyers as becoming more selective and cautious . Corbett notes that buyers are sensing tougher economic conditions and therefore taking more time before committing to making an offer. Listings levels are at a reasonable level, but properties are sitting on the market longer. Pricing is back to relatively normal levels meaning that the eventual selling price is going just above the guide, not way above (as during Covid).

Brisbane’s median house price is now $924,000 and up 12.5% from last year.

Glen Sainsbury, Brisbane Principal Buyers Advocate has observed that Brisbane is bucking the national trend. With loads of interstate migrants chasing a more affordable lifestyle and investors chasing higher yields, his team has been as busy as ever been since the height of the

Covid boom. He notes that FOMO and overpaying is starting to creep back into the market, and this is being reflected by the median prices continuing to rise..

Middle suburbia, 10-30km out from the CBD, where more affordable housing is situated, is benefiting most from higher demand. The inner-city apartment market is still patchy but has finally made up for decades of lost time. Demand for units is surprisingly strong as the relative affordability for apartments is driven by demand from first and second home buyers.

Sainsbury says the rental market is very strong for properties with rents under $1000 and underpinned by a 1% vacancy rate.

Senior Buyers Agent, Angela Murray on the Gold Coast is seeing very strong buyer demand from downsizers, prestige buyers and investors. The comparable affordability of the Gold Coast to Sydney and Melbourne is attracting many buyers north to discover a new way of living. The ability to buy close to waterways, beaches and parklands at half the price is very appealing. Downsizers are also capitalising on a wide variety of townhouses and luxury apartments from $700k to $1.5m

Melbourne’s median price has just reached over $1m. Senior Buyers Advocates Tass Pattas, Amanda Jones and Robin Ragadwala are observing a subdued buyer sentiment. For home buyers there’s plenty of lookers and crowds at auction with multiple bids for well located and good quality property. Properties needing renovation are in lower demand. Listing volumes are generally lower across the board as vendors of good assets tend to hold for longer. However, quality suburbs are still getting record prices – a block in Balwyn North just sold for $3.25m (and under 1000 m2). Units and townhouses are selling at reasonable prices and there is still good affordability in the inner-city areas. With increasing numbers of single person households this provides good opportunity for investors. Melbourne appears to be at the low point in the cycle which bodes well for long term capital growth.

“It’s an interesting and opportunistic time to buy” says Kevin Mason, Principal Buyers Advocate for Newcastle & Central Coast, “because there’s less competition in the market as some buyers are being scared off due to economic uncertainty. Mason claims that there’s a good range of stock to choose from and that prices are still rising slowly and steadily. However, between now to December, property prices could plateau while there is negative media news, giving savvy buyers the chance to buy well before the market resurges off the back of interest rate cuts when they materialise. Mason also notes the Newcastle market has attracted a lot of Sydney-siders still craving access to the big smoke but without the traffic snarls and hefty prices.

The Road Ahead

The latest House Price Report from Domain was released last week with some outstanding predictions. Domain’s Chief of Research and Economics, Dr Nicola Powell, believes it is plausible that Sydney’s median house price could hit the $2 million mark in just a matter of three years. For this to happen, house prices would need to rise by 22.9%. Sydney’s median house price is now $1,627,625, compared to the December 2023 quarter figure of $1,594,582. This highlights a quarterly change of 2.1% and an annual change of 11.1%.

Melbourne’s median house price is now at $1,032,020 compared to $1,024,442 in March 2023, indicating the market has held steady with only a 0.7% annual increase.

Brisbane ‘s median house price is now at $924,98 compared to $821,546 in March 2023, representing a 12.5% annual increase.

See details for each capital city below:

Source: Domain House Price Report March 2024.

Source: Domain House Price Report March 2024.

If you’d like to get your property plans on track or discuss ideas for your next purchase, please reach out to my friendly team of buyers advocates today. Please call 1300 655 615 or submit your enquiry here. We’d be delighted to help.

Call us on 1300 655 615 or send us your Property Brief here.   

We’d be delighted to help.  

Click here to get in touch with the Propertybuyer team:

or call 1300 655 615