Residz Team 3 min read
The Australian property market has experienced a tumultuous journey over the past three years. From record-breaking price surges in September 2021 to a sharp downturn in September 2022, and finally, signs of a remarkable resurgence in September 2023, this period has been marked by significant shifts and challenges.
I thought it might be interesting to look back at the fortunes of the Australian property industry over these three consecutive Septembers.
September 2021: The Peak
In September 2021, the Australian property market was riding high on a wave of optimism. According to a Yahoo article from the time, property prices in Australia rose by 1.5% over that month, and this increase marked the fastest annual pace of growth since June 1989. Dwelling values had surged by 17.6% in 2021 alone (CoreLogic).
Compared to the 12 months prior, it was an incredible 20.3% increase.
However, there was already growing (and soon-to-be-realised) concern among policymakers, including the Reserve Bank, bank chiefs, and Treasury, about the red-hot property market. Concerns were raised about the rising inequality and housing unaffordability driven by soaring property prices.
In fact, affordability was offered up as a reason for early signs of an easing of the pace of the price growth.
September 2022: The Downturn
Fast forward to September 2022, and the property market had undergone a dramatic shift. According to an online article in Your Investment Property Mag at the time, Australia's house prices had fallen at the fastest quarterly pace, reflecting the impact of successive interest rate hikes that began in March that year.
Over the quarter, combined capital cities reported a 4% quarterly decline. From their peak in March 2022, prices were down by 4.9%.
Domain's September 2022 House Price Report highlighted that the downturn was gaining momentum and spreading geographically.
Domain's Chief of Research and Economics, Dr. Nicola Powell, attributed this downturn to a mix of factors, including interest rate hikes, high inflation levels, and increasing household debt. Many buyers and sellers were navigating market conditions they had never experienced before.
September 2023: The Remarkable Resurgence
Now, in September 2023, the Australian property market has once again captured headlines, but this time for a different reason. According to Martinuzzi Property Group (MPG), housing prices had surged to a staggering $10 trillion by the end of August 2023, marking a return to peak levels last seen in June 2022. Despite a peak-to-trough decline of approximately -9.1%, the market had displayed remarkable resilience.
Since March 2023, property values had bounced back, showing a 4.9% increase. The market was now just 4.6% away from the peak levels recorded in April 2022.
According to MPG, this impressive rebound can be attributed to the sustained population growth driven by increasing migration and fewer departures. This demographic shift is not only boosting demand for housing but also intensifying competition among buyers due to the limited supply, which remains 23% below the five-year average.
Summary
The Australian property market has experienced a rollercoaster ride over the past three Septembers. Whether it’s the dizzying heights of 2021 to the challenging downturn of 2022 and the surprising resurgence of 2023, it's clear that these past few years have been a confusing time for potential property buyers and sellers.
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