PropTrack Property Market Outlook – May 2022

Price growth continues to slow with interest rate hikes expected to exacerbate the slowdown. 

After prices increased rapidly throughout the pandemic, the heat continues to come out of the market.

With interest rates now rising, and expected to rise much further, we are expecting price growth to continue to slow over the coming months.

The heat is coming out of the market, although activity remains strong. Picture: Getty

However many indicators show that the market still maintains a level of strength.

The supply of properties listed for sale remains tight, with total listings 38.4% lower than the decade average. More new listings are now hitting the market each month than experienced in recent years, although a string of public holidays caused vendors to pull back in April.

Over the first four months of 2022, the number of preliminary sales was 3.6% lower than over the same period last year. Although sales volumes have eased, the number of potential buyers per listing is 9.7% higher year-on-year.

The increase in new listings has afforded buyers more options and less urgency to purchase. With an interest rate increase in May, and more rate increases expected over the coming months and years, it is likely that demand for properties will ease and we will likely start to see national property prices start to decline.

For listings, we’re moving into a seasonally slower period of the year and the Spring selling season thereafter will be the real indicator of vendors preparedness to list.

While higher rates and price falls might discourage vendors from listing, many have seen a significant increase in equity over recent years and they tend to buy and sell in the same market, so while they may not get top dollar for their property, the property they are looking to purchase will have also reduced in price.

Let’s take a look at market activity across the states and territories. 

• New South Wales
• Victoria
• Queensland
• South Australia
• Western Australia
• Tasmania
• Northern Territory
• Australian Capital Territory

New South Wales

Dwelling prices in Sydney fell by 0.1% in April 2022 to be 13% higher year-on-year, their slowest annual rate of growth since February 2021. Across regional NSW, property prices were 0.6% higher over the month and 24.5% higher year-on-year which was the slowest annual rate in 12 months.

Sales volumes

In Sydney, preliminary monthly sales volumes were 8.5% lower over the first four months of this year compared to the same period last year. In the rest of NSW, preliminary sales volumes are down 15.5%.

Days on site

In April 2022, the median days on site for a property sold in Sydney was 28 days. In regional NSW, days on site increased marginally to 36 days.

Potential buyers per listing

The number of potential buyers per listing in Sydney fell by 0.9% in April 2022 to be 8.8% lower year-on-year. In regional NSW, the number of potential buyers per listing fell by 1.3% over the month but was 8.1% higher year-on-year.

Property listings

The number of new listings of properties for sale in Sydney fell 26.2% in April 2022 and was 18.5% lower year-on-year. In regional NSW, new listings fell 14.4% in April and were 4.9% lower year-on-year.

The total number of properties listed for sale in Sydney fell 4.2% in April 2022 however, they were 9.7% higher year-on-year. In regional NSW there was a 0.8% monthly fall in total listings which took them 8.9% lower year-on-year and 56.2% lower than their decade average.

Where to from here?

With interest rates having increased earlier this month, we expect a further slowing of market conditions over the coming months. The slowdown is likely to be more rapid in NSW than elsewhere given much higher property prices which will see affordability issues bite more severely as interest rates increase further over the coming months.

Victoria

Dwelling prices in Melbourne were unchanged in April and have increased by 9.3% over the past 12 months. In regional Victoria, prices rose 0.2% over the month to be 20.4% higher year-on-year.

Sales volumes

Over the first four months of 2022, preliminary sales volumes in Melbourne were 0.1% lower than the same period last year, and 17.5% lower in regional Victoria.

Days on site

In Melbourne, the median days on site for properties sold in April rose slightly to 29 days. In regional Victoria, days on site rose from 37 days to 40 days over the month however, that remained lower than the 42 days a year ago.

Potential buyers per listing

In Melbourne, the number of potential buyers per listing rose 0.6% in April to be 1% higher year-on-year while in regional Victoria it fell 1.7% over the month to be 1.1% higher year-on-year.

Property Listings

There was a 25.4% monthly fall in new listings in Melbourne in April 2022. Regional Victoria also recorded falls over the month (-19.9%).

Total listings also declined across the state, with stock levels now 2% lower than the decade average in Melbourne, and 51.6% lower in the regions.

Where to from here?

Although in Melbourne price growth has been moderate throughout the pandemic relative to other areas, the market still has relatively high property prices meaning that affordability challenges will be quicker to appear than they do elsewhere as interest rates rise.

There are already signs that demand is slowing and given this, price growth is likely to slow more rapidly in Melbourne and regional Victoria than other parts of the country.

Queensland

In April, property prices in Brisbane rose by 0.2% to be 26.3% higher year-on-year. In regional areas, prices increased by 0.5% during the month to be up 24.3% on year.

Sales volumes

Over the first four months of 2022, preliminary sales volumes in Brisbane are now 0.6% lower than over the same period last year while in regional Queensland they are 2% lower.

Days on site

In Brisbane, median days on site increased to 37 days in April from 32 days in March although, properties are still selling faster than the 42 days recorded a year ago. In regional Queensland, days on site rose to 51 days over the month from 46 days in March, but remains lower than the 56 days recorded in April 2021.

Potential buyers per listing

The number of potential buyers per listing in Brisbane rose a further 0.9% in April 2022 to be 19% higher year-on-year while in regional Queensland there was a 2.2% monthly increase, up 29% year-on-year.

Property listings

Brisbane recorded a 12.9% monthly fall in new listings during April. In regional Queensland, new listings were 18% lower over the month.

Total listings remain well below the decade average, down 42.9% in Brisbane and 52.5% in the regions.

Where to from here?

Higher interest rates will impact the Queensland housing market and we’re already seeing price growth and sales volumes slow. However, property prices are much lower than in NSW and Victoria, and the differential remains close to a record high which is likely to result in a more moderate slowdown, at least initially.

Western Australia

Perth dwelling prices increased by 0.5% in April 2022 to be 7.9% higher year-on-year which was the slowest annual rate of growth since November 2020. In regional WA, dwelling prices fell for their second consecutive month, down 0.2% to be 10.4% higher year-on-year.

Sales volumes

Over the first four months of 2022 preliminary sales were 18.7% higher than the same period last year in Perth and 7.3% higher in regional WA.

Days on site

Median days on site increased to 54 days in April. In regional WA, days on site fell to 76 days, which is well down on the 106 days a year earlier.

Potential buyers per listing

The number of potential buyers per listing in Perth fell by 1.5% in April, but remains 12% higher year-on-year. In regional WA there was a 1.6% monthly increase, taking the figure 35.8% higher year-on-year.

Property listings

Although the number of new properties listed for sale in Perth fell 18.2% in April 2022, they remained 4% higher than the decade average. In regional WA, new listings fell 19.9% during the month.

The number of total listings in Perth was lower over April 2022 (-2.1%) and year-on-year (-1%) as well as being -16.2% lower than the decade average. In regional WA, total listings were lower over the month (-2.7%) and year (-19.2%) and were -47.3% lower than their decade average.

Where to from here?

It’s quite interesting what is happening in WA because there has been a marked slowdown in price growth, yet sales volumes remain very strong. I would expect that price growth continues to slow from here while higher mortgage rates are also likely to see a slowing of sales activity over the coming months.

South Australia

Adelaide property prices increased by 0.3% in April in both Adelaide and regions.

Sales volumes

Over the first four months of 2022, preliminary sales are 6.8% higher than the same period last year in Adelaide and 0.2% higher in regional SA.

Days on site

In Adelaide, median days on site rose to 25 days in April, well below the 36 days recorded a year ago. In regional SA, days on site was unchanged over the month at 56 days.

Potential buyers per listing

The number of potential buyers per listing in Adelaide rose 0.5% in April to be 32% higher year-on-year, while in regional SA the 7.6% monthly increase took the figure 77.7% higher year-on-year.

Property listings

New listings in Adelaide fell 20.8% in April 2022, and 17.7% in regional areas.

Total listings in Adelaide are now down 19.1% year-on-year and 37.9% lower than their decade average. In the regions, total listings are 35.3% lower year-on-year and 59.9% below the decade average.

Where to from here?

Although the housing market has seen price growth start to slow, the state’s other metrics highlight that demand remains quite strong. Further to this, SA is the cheapest housing market in the country and while it has been a steady performer in terms of price growth, it is rarely the strongest or weakest market, it’s fairly stable. The significant affordability advantage is likely to result in the market easing at a slower pace than others as interest rates increase.

Tasmania

Hobart dwelling prices fell by 0.4% in April, their first monthly decline since December 2018 and the largest monthly decline since June 2012. Despite the fall over the month, prices were still 20.8% higher year-on-year. In regional Tasmania, prices rose by 0.6% over the month to be 23.4% higher year-on-year.

Sales volumes

Over the first four months of the year, preliminary sales volumes in Hobart were 14.1% lower than last year. In regional Tasmania, sales volumes were 7.2% lower compared to last year.

Days on site

Hobart’s median days on site increased to 27 days in April, up from 25 days in March – although remained below the 30 days recorded a year earlier. In regional Tasmania, days on site rose from 38 days in March to 42 days in April which remained lower than the 50 days a year earlier.

Potential buyers per listing

The number of potential buyers per listing in Hobart was 1.9% lower in April to be 17.6% lower year-on-year. In regional Tasmania potential buyers per listing increased 2.9% in April to be 1.9% higher year-on-year.

Property listings

New property listings in Hobart fell by 7.5% month-on-month in April, and were 13.7% lower in regional Tasmania.

Although total listings in Hobart increases 4.7% in April to be 21.4% higher year-on-year, they were still 46.4% lower than the decade average. In regional Tasmania, total listings were 1.8% lower month-on-month but 1.4% higher year-on-year however, supply remained much lower (-61.1%) than the decade average.

Where to from here?

The rapid increase in property prices over recent years in Tasmania has seen its affordability advantage deteriorate. While price growth, sales volumes and potential buyer volumes are starting to ease low stock levels available for sale should result in further price increases albeit at a slower pace.

Northern Territory

Darwin property prices rose by 0.5% in April to be 10.6% higher year-on-year, the slowest rate of growth since December 2020. In regional NT, prices rose 0.2% over the month to be 2% higher year-on-year.

Sales volumes

Over the first four months of this year, Darwin recorded 26.2% more sales than the same period last year. In regional NT, sales are 13.8% lower.

Days on site

Median days on site in Darwin increased to 57 days in April, up from 51 days March. In regional NT, days on site fell from 91 days in March to 72 days in April.

Potential buyers per listing

The number of potential buyers per listing in Darwin fell 3.1% in April to be 8.1% lower year-on-year. In regional NT there was a 2.4% monthly fall, however year-on-year it was up 27.1%.

Property Listings

The number of new listings in Darwin fell by 18.4% in April but was still 1.6% higher year-on-year and 18.3% higher than the decade average. In regional NT, new listings were 34.1% lower month-on-month and 29.3% lower than the decade average.

Total listings in Darwin dipped in April, but remain 21.4% higher year-on-year. This is still 12.5% lower than the decade average. In regional NT, total listings were 4.3% lower over the month, 13% lower year-on-year and 21.7% below the decade average.

Where to from here?

Property price growth is already slowing, and properties are starting to take longer to sell while potential buyer numbers are easing. Given this, we would expect that the market slows further over the coming months as interest rates start to rise.

Australian Capital Territory

Dwelling prices in Canberra were unchanged in April, the first month in which prices hadn’t increased since April 2020. Over the past year, prices have risen by 22.8%.

Sales volumes

Over the first four months of this year preliminary sales are 13.9% higher than over the same period last year.

Days on site

Median days on site in April was unchanged over the month at 24 days, which was lower than the 26 days recorded in April last year.

Potential buyers per listing

The number of potential buyers per listing in Canberra increased 0.9% in April 2022 however, it was still –4.8% lower year-on-year.

Property Listings

There was a 33.5% monthly fall in new listings in April, which took new listings 3.1% lower year-on-year however.

While the number of total listings fell 8% in April, they were 7.2% higher than a year ago, and 0.2% above their decade average.

Where to from here?

Price growth in Canberra has already stalled and with more properties for sale and fewer buyers it looks likely that the market will continue to slow over the coming months as interest rates increase.