After a slight turnaround in January, house prices have returned to their recent form, softening to a 0.6% increase across February. While this is the 17th straight monthly increase, it is the smallest since October 2020. It is also notably down on January’s 1.1% and the cyclical high of 2.8% seen in March 2021.
Even more noteworthy is that, while some markets are significantly outperforming others, every major market is showing signs of slowing growth. The largest capitals are leading this charge, with Sydney prices down 0.1% (the city’s first decline since September 2020) and Melbourne prices stagnant. However, the smaller capitals are following suit, with the growth rate significantly slowing in Adelaide (2.2% in January, down to 1.5% in February), Brisbane (2.3% in January, down to 1.8% in February), and Canberra (1.7% in January, down to 0.4% in February).
This trend is also being seen in regional areas, with several key “rest of state” markets also experiencing slowing growth. That said, the combined regional markets have still outperformed the combined capitals by more than 3:1 over the last three months (up 5.7% v up 1.8%). This has largely been attributed to the lower levels of advertised stock and sustained interest from buyers looking to escape the city.
In fact, a strong correlation has been noted between the volume of available stock and market performance. Specifically, in markets where advertised supply is significantly down (like Brisbane, Adelaide, and regional areas), growth numbers remain relatively strong. However, in markets where supply has seemingly returned to normal, price growth is much more modest.
Finally, in good news for investors, rental yields seem to have stabilised, albeit at historically low levels. This is largely due to rental growth outstripping housing value growth for the first time in a long time. And, with this trend expected to continue, it appears rental yields may have reached the bottom of their cycle.
What lies ahead
It is clear that the tides are turning for the Australian property market. Understandably, this has many investors worried and some questioning what moves they should be making right now – if any. But it is important to remember that it is not all bad news and astute investors can always find a good opportunity.
In that spirit, we wanted to explore the more positive moves some investors are making right now. This includes:
Suburb Spotlight: Eaglehawk (VIC)
Originally established as a gold mining town, the stunning suburb of Eaglehawk has a rich and interesting history. A true goldfields community, its streets are lined with impressive public buildings and grand Victorian homes. And while it may have lost some of the shine of its bygone days, many are rediscovering this hidden treasure.
Part of the City of Greater Bendigo, and sitting roughly 6km north of Bendigo CBD, Eaglehawk was an independent Borough up until 1994. As a result, residents enjoy a great array of local amenities, including multiple schools and a range of sporting facilities. It also has its own community-run arthouse cinema (located in the impressive Town Hall building) and plenty of picturesque parkland.
Despite all of this, Eaglehawk remains quite affordable, with a median house price of around $420,000. However, prices have risen by more than 20% over the last year and more than 6% over the last quarter. This reflects a renewed interest in the area and a rejuvenation of its recent reputation as a mostly working-class suburb.
To make Eaglehawk even more appealing to investors, the area’s vacancy rate is currently about 0.5%. Given approximately one-quarter of the local population rents, this suggests a strong demand for quality rental properties. This is supported by the median rental yield, which is currently 4.45% – and rising.
At Search Party Property, we specialise in developing tailored investment strategies and will work with you to come up with a suitable plan of attack. We also regularly assess your strategy ensuring that it is fit for purpose and delivering the desired results.