The Australian Property Market Outlook

The Australian property market outlook is likely to be influenced by a range of factors, including cyclical movements in interest rates and cash rate cycles. But there are also some areas of stability that should help investors navigate the market and make good investment decisions.

The housing market has a tendency to experience periods of price growth, stagnation and decline. While this is a normal part of the cycle, it can be a cause for concern for people who are concerned about short-term volatility.

As with other commodity markets, it is largely driven by the behaviour of those who inhabit it. It's a fact that human behavior can be highly influential on the housing market.

A lot of this has to do with demographics - areas that are gentrifying or where aspirational and affluent people want to live will tend to outperform.

Areas with high walk scores - locations that have a wide range of amenities within a 20-minute walk or drive are where capital growth will be strongest. This is because people are prepared to pay a premium for a place that is close to everything they need. Learn more from here to get the unique ways of finding these services easily.

In a similar way, inner and middle-ring suburbs that are undergoing gentrification will outperform in the future as well. The reason for this is that these are areas where more affluent residents will be living and the incomes of these people will be rising, which increases their ability to afford and pay higher prices for the property they buy.

Another important factor is affordability - homes will continue to be a challenge for many buyers with property values 20 - 30% higher than they were at the start of this cycle, and at a time when wages growth has been moderate at best and minimal in real terms for most Australians.

Hence, we can expect the pent-up demand for home buyers to be waning in the years ahead, with the current level of buyer and seller activity expected to drop by around half in 2022. Those who do decide to buy will face competition and may need to negotiate harder on price.

According to investment bank Jarden, house prices could fall by as much as 25 per cent this year, before jumping back up 10 per cent in 2024. The Reserve Bank's 'hawkish' interest rate hikes to keep inflation under control are also a big part of the blame for the outlook.

The 'fixed rate cliff' will be a concern for some investors but the RBA is on track to continue raising rates into early 2023, which will help protect property owners from further falls in prices. However, with the number of homes for sale still relatively low, buyers and sellers may have a hard time finding properties to purchase.

Affordability issues are a big part of why the property market has been stalling in Sydney and Melbourne, where prices have dropped significantly. Nevertheless, the market has been stabilising in other parts of the country and auction clearance rates are on the rise.

Get a general overview of the topic here: https://en.wikipedia.org/wiki/Real_estate.