REA Chief Economist Nerida Conisbee, has released her spring update for the Australian property market.
Conisbee says that property investment has peaked, as conditions such as financing and home loan rates get tougher for investors. As a result, the demand for apartments in September – most of which are owned by investors – has declined.
On a more positive note, she observes that changes to stamp duty and first homeowners’ grants in New South Wales and Victoria, led to a resurgence of first-home buyer lending in August.
Conisbee predicts that price growth will continue to moderate, and emphasises that the market will not crash.
Although Melbourne and Sydney are slowing down, the fall will be softened by the job creation and population growth of those two cities, she says in a video titled “Is the market heading for disaster?”
“The key driver of price moderation in our two biggest markets has been home loan rate increases by banks, independent of the Reserve Bank’s monthly decision,” she adds.
With affordability now a major issue, buyers have been flocking to Hobart, as the country’s most in-demand suburbs are South Hobart and Battery Point in Tasmania, according to Conisbee.
NSW has also been seeing demand growth in regional areas with better affordability.
With fewer investors and concerns about oversupply in apartment markets, the result will be a slowdown in building approvals. “Longer-term, less supply means higher prices for renters and buyers,” she concludes.