I’ve been through Cotality’s November update, and there’s quite a bit happening. Prices are coming back in most capitals, rents are still rising, and buyers have more breathing room than they did a year ago. The RBA also lifted the cash rate to 4.85% on 3 November, its fifth hike this year, which adds to the pressure on borrowing capacity.
What’s happening?
Prices are falling across most capitals. Brisbane fell 2.0% in October, followed by Perth (1.7%), Sydney (1.6%), Adelaide (1.2%) and Melbourne (0.8%). Brisbane and Perth have now fallen 6.1% and 5.7% over three months, so conditions have changed pretty quickly.
A couple of capitals are still edging up. Darwin rose 0.6% in October and Hobart rose 0.5%, although both were slightly down over the quarter. Regional markets have generally held up better than the capitals, but it really depends on where you’re looking.
Rents are still rising, but the pace is easing. Darwin (11.4%) and Hobart (8.4%) led annual capital-city rent growth. Regional Tasmania (8.7%), Perth (7.5%) and Brisbane (6.5%) also stood out. Across Australia, rents rose 5.3% over the year, but only 0.4% over the latest quarter.
Regional Vic and NSW are seeing softer prices alongside higher rents. Prices fell 1.5% in regional Vic and 2.1% in regional NSW over the quarter. Rents were still up 3.4% and 4.8% over the year, respectively. Gross yields sat at 4.3% in Vic and 4.2% in NSW.
Buyers have more time to negotiate. Homes are taking a median of 41 days to sell nationally, up from 24 days a year ago. The typical discount from the original asking price has widened to 4.5%.
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Key takeaways
Be aggressive with your offers. If a property has been sitting around, needs work or the vendor is motivated, there’s room to push on price. Use recent comparable sales to back your offer, set your limit and be prepared to walk away.
Run the numbers on today’s rent. Rising rents are helpful, but I wouldn’t rely on another big increase to make a purchase affordable. Allow for repayments, vacancy and the usual ownership costs.
Get specific about the location. Regional NSW or Victoria covers a lot of very different towns. Check what’s selling, what’s sitting around and what similar properties are actually leasing for in the area you’re considering.
A slower market is a chance to buy well, not a reason to rush. If you want a second opinion on a property you’re looking at, jump into the Under450k private community and we can run through it together.
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Disclaimer: The information provided in this article is for educational and informational purposes only. It is not intended as financial, legal, or professional advice. Always do your own research and consult with a qualified professional before making any decisions. The opinions expressed here are solely those of the speaker and do not reflect the opinions or views of any other organisation. By using this information, you agree that the creator of this content is not responsible for any financial or other losses you might incur.
