If you’re looking to invest in the Australian property market, I have some exciting news to share with you! New research by JP Morgan suggests that the housing market could soon stabilize, bringing hope for a much-needed recovery after the sharpest downturn in its history.
According to the research, house prices fell by 9.1% since their peak in May 2022, but they are expected to stabilize sooner than many are predicting. Auction clearance rates have improved in the past few weeks, with an average of 64% compared to 54% in December.
Tom Kennedy, the author of the report, notes that historically, clearance rates are closely related to house prices, with changes in clearance rates leading price growth by around six months. Despite the potential for COVID-19-related disruptions and RBA tightening to compromise this relationship, the correlation through 2022 remained robust, with prices broadly tracking the path implied by the turnover data.
The research shows that house prices are expected to stabilize by mid-year, implying the national peak-to-trough price decline would end up being 10%. The report warns that the biggest risk to this outlook is the Reserve Bank of Australia overtightening in response to high inflation.
At Hera Property Group, we’ve been predicting a property market reset later this year when interest rates eventually peak, and when inflation is under control as consumer confidence returns. That means there is currently a window of opportunity for homebuyers and property investors with a strategic long-term focus.
The possibility of a stabilization in the market by mid-year offers hope for a much-needed recovery. This weekend, March commenced with more positive results for capital city auction markets generally, although auction numbers were down and clearance rates lower for most compared to last weekend. The national auction market reported a clearance rate of 69.1% at the weekend which was lower than the 72.4% reported last weekend and still lower than the 73.5% recorded over the same weekend last year.
Overall, this is positive news for homeowners and property investors. Keep an eye on the market and act fast to take advantage of the opportunities available. Good luck!