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HomeNewsPIPA Quarterly National Market Update June quarter 2022

PIPA Quarterly National Market Update June quarter 2022

PIPA quarterly national market update

By Nicola McDougall, Editor, The Female Investor and PIPA Chair

The flight to quality is well under way as market conditions change around the nation, according to the new PIPA Quarterly National Market Update.

The new report pulls together insights and analysis from six market experts and PIPA members from the PIPA Adviser quarterly e-magazine national’s market update.

Property markets remain sound with experienced homebuyers and investors understanding the need to increase interest rates from their emergency pandemic-induced lows.

In all my years of reporting on property markets and economic metrics, I don’t think I’ve ever seen such outlandish commentary on the interest rate increases as occurred in May and June.

While, yes, the rate rises are earlier than the central bank had indicated, I don’t think any of us really wanted to believe that the cash rate would need to stay at such an emergency low level for multiple years.

That’s because, if it did, it would mean that our economy was in very bad shape indeed, which would be a bad thing for all of us – rather than the opposite.

The robust banking sector means that new borrowers were already financially stress-tested by two or even three percentage points higher than the actual interest rate attached to their mortgages.

This fact, as well as most borrowers being well ahead on their repayments, means that moderate increases to interest rates are nothing to be feared.

Rising costs of living are more of an issue for most households, with inflation now well above the Reserve’s two to three per cent target band. However, the central bank has indicated that it expects high inflation to be a temporary situation, rather than a permanent one.

Further, most major banks appear to be pricing in a maximum interest rate of around five per cent to six per cent within two years, which is still relatively low compared to historical averages.

It’s obvious that affordability constraints, as well as changing monetary policy, has taken some of the heat out of property markets – especially in our more expensive locations – with members reporting fewer active buyers.

However, with more listings available and fewer buyers, it’s clear that the current changing market conditions are presenting a plethora of opportunities for long-term homebuyers and investors.

Please find market insights for the June quarter from six property investment experts and PIPA members below.


 Market Update – NSW – Ben Plohl, Director, BFP Property Buyers

“A clear transition is evident across the marketplace where the dropping of price guides and auctions being passed is the new norm.

“A-grade properties are still moving and for good prices, however, we are seeing a significant slowdown in B- and C-grade stock.

“The disparity between vendor expectation and offers from buyers in some campaigns has been very interesting.

“According to the CoreLogic index results as at 31 May 2022, Sydney saw a one per cent decline in dwelling values, however, it’s worth pointing out that we are still 22.7 per cent above pre-COVID levels.

“We have witnessed a range of different auction results over the past couple of weeks with some auctions struggling to muster up a single registered bidder, while others are seeming some 10 to 15 registered bidders.

“Overall, the market is quite patchy with no distinct trend or pattern. Although numbers at some open homes have been down, we are noticing a lot of opportunists appearing.

“Consumer confidence has taken a battering due to the negative news headlines, global unrest, and the rapid increase to the cost of living.

“No doubt this is and will continue to dampen buyers’ appetites when buying real estate and the market will continue to flat line and be quite patchy.

“The trajectory of the cash rate will be one to watch very closely as this will have an effect on market direction.

“Overall, these are the market conditions buyers should be excited about. Less competition, an increase in inventory, and dampening consumer confidence is when opportunities start to appear.”


Cate Bakos – Buyers’ advocate, Cate Bakos Property 

“The election jitters and interest rate increase didn’t do much to change Victoria’s rate of capital growth – we’ve sustained yet another very static month for both our capital city and regional market with our capital city exhibiting -0.7 per cent price movement and the combined regions exhibiting +0.4 per cent.

“This is a pleasant surprise given the media doom and gloom, and the mere fact that buyers do typically opt to sit on their hands in the lead-up to a Federal Election.

“The ALP’s lack of tax reform and significant policy change was a stark differential to the early months of 2019 when voter nerves became palpable in the final months leading up to our last election.

“We anticipate that Anthony Albanese’s shared equity scheme won’t have a dramatic impact on the property market as a whole, however, the headwinds of inflationary pressures and the increased cost of living are still a significant threat to further negative consumer sentiment.

“By far, the most significant change within our property market relates to our rental outlook.

“With onerous rental reforms rolling out and a general supply/demand imbalance in favour of rental providers, we expect that strengthening vacancy rates and increasing rents will be a hallmark of 2022 and beyond.

“As far as stock levels go, with winter approaching and buyer scrutiny remaining high, we can anticipate that A-grade properties will continue to attract strong competition and prices will hold up for quality real estate.”


Meighan Wells, Director & Principal, Property Pursuit

 “Southeast Queensland, and particularly Brisbane, is experiencing a fundamental shift in buyer behaviour across the residential housing market.  And I, for one, am relieved.

“The type of buyer behaviour that has been exhibited over the past 17 months has been highly alarming.

“People making significant financial and personal decisions that are overwhelmingly based on an extreme fear of missing out is fundamentally flawed to the degree of bordering on insanity.

“What lead to this behaviour and what has changed since Easter?

“Much has been written about the storm of conditions that lead to the rapid rise in house prices.  The combination of low interest rates, strong net migration, affordability, and a desire for a change in lifestyle have been key factors.  But let’s break that down by looking at buyer behaviour.

  1. Fewer people leaving SEQ

“A lack of higher paying salaries and limited career progression relative to other geographic locations – Sydney, Melbourne, and overseas – used to be one of the factors that lead to moderate median house price growth for Brisbane over the long-term.

“Upwardly mobile professionals with strong career trajectories were forced to look interstate or overseas for significant professional pathways.

“Consequently, the prestige upgrade property market was somewhat stifled by the exodus of professionals with high incomes in years gone by. But the work from home revolution has put a squeeze on the outflow of talent.

“Enforced periods of creating and adapting to WFH practices have for many professionals proved enticingly attractive and provided greater employment options across the southeast.

  1. More people coming to SEQ

“Interstate migration is at its highest level in 20 years and there are a number of factors contributing to this. The COVID-created work from home revolution appeared to some families to be the answer to the question that they did not even know they had pre-March 2020.

“Not only is the weather beautiful one day, perfect the next, a yearning to slow down the pace of life and spend more time doing family-oriented activities appears to be at an all-time high post-COVID restrictions.

“Australia has also been perceived as a safer option for Aussie expats to return home with better managed health system and economy.

“Many have moved their repatriation plans forward, too, and moved into properties they had purchased in previous years, decreasing the supply of long-term rental properties.

  1. Affordability

“An increasing median house price differential between Brisbane and Sydney/ Melbourne is often a lead magnet for southerners as housing up north starts to look far more affordable.

“The last big influx of southerners was in the early 2000s when the price differential was at an all-time high, which led to rapid median house price growth over the same period.


Adam Hindmarch, Director & Principal Strategist, Prospa Property Advisory

 “The Adelaide property market has maintained its upward trajectory over the past few months, with prices continuing to rise.

“Buyer demand remains very high and the availability of stock on market remains at relatively low levels.

“Adelaide is now firmly on the radar for eastern seaboard investors, who are flocking to our city in droves – and driving up local property prices according to many locals!

“Real estate agents across Adelaide are reporting that it is not uncommon for more than 50 per cent of enquiries on a listing to come from interstate investors and buyer groups. The majority of whom being from Sydney and Melbourne, where prices are continuing to flatten, and investors are looking for value in other markets.

“Following the recent interest rate rise there has been a very slight reduction in urgency within the Adelaide market, but certainly not enough to slow things down.

“We do have to consider that the last time we saw an interest rate rise was back in 2010, meaning there is a generation of Australian homeowners who have never experienced an interest rate rise and may be a little rattled by this.

“So, aside from amazing food, wine and lifestyle… why has Adelaide become so popular?

“Affordability is a strong motivator for many investors.  In the northern suburbs you can still buy a standalone house in the $300,000s!  In the southern suburbs there can also “bargains” in the low $400,000s.

“But, as with every investment, there is definitely an element of buyer beware!

“Investors need to understand the location and its inherent risks, rather than just “investing in Adelaide.”

“Along with affordability, rental conditions in Adelaide are extremely attractive to investors.  Vacancy rates are around 0.6 per cent and, according to SQM Research, rents have risen by 18.9 per cent in the 12-month YTD.

“Property managers are reporting that rental demand is ‘through the roof’ and some properties are being tenanted in minutes, not days or hours.  It is not uncommon to have 70-plus people attend an open inspection and over 30 applications submitted on an average three-bedroom home, with brand-new and renovated properties achieving premium rents.


Matthew Hughes, Managing Director, Capital Property Advisory.

“The biggest news to hit headlines and the hip pocket recently has been a rise in interest rates.

“On the third of May, the Reserve Bank of Australia lifted the cash rate from the pandemic induced record low of 0.1 per cent to 0.35 per cent.

“This comes as the central bank was adamant as recently as late last year that rates would not rise for another two years, until 2024.

“Not only have rates just been lifted, there are reasonable expectations that there will be more increases this year.

“In April, the Australian Bureau of Statistics released data showing inflation for the year to March 2022 was 5.1 per cent. This is the highest rate of inflation since GST was introduced by the Howard Government in 2000.

“It comes as no surprise that attention quickly turned to the RBA. After all, the rate had not risen since November 2010, with November 2020 being the last time it changed at all.

“Record-low interest rates are just that – record low. They should not be expected to remain as such. Additionally, lenders’ rules have tightened towards serviceability, with APRA advising borrowers to face a stress test three per cent above the loan product rate. Previously, the serviceability buffer was 2.5 per cent.

“While the higher-priced east coast cities will certainly feel the pinch, this won’t be the case in Perth.

“Many households in Melbourne and Sydney are spending around 40 per cent of their disposable income on mortgage repayments, according to data from the Real Estate Institute of Australia. Households in Perth, however, are spending circa 26 per cent on meeting loan repayments.

“Only recently has Perth overtaken its previous median price record, which was set in 2014.

“Despite the recent growth, Perth remains one of the most affordable capital cities in Australia.

“Historically, Perth residential prices have had a unique relationship with higher interest rates and it is not unusual for Perth to be counter-cyclical to the eastern markets.

“The Reserve Bank cut the cash rate to a then relatively low 4.25 per cent in December 2001, amid ongoing global uncertainty following the 9/11 attacks.

“However, this rate didn’t last long. By May 2002, the rate increased to 4.5 per cent and kept increasing until early 2008 when it peaked at 7.25 per cent, just before the GFC.

“And what happened to Perth property prices during this time? They rose significantly. Perth’s median house price grew sharply each year until 2008, despite the higher rates and subsequent increases.

“In terms of supply, the Perth rental market has continued to tighten, with the vacancy rate currently 0.7 per cent. This is the lowest rate ever recorded by REIWA in 40 years. As previously noted, a distinct lack of supply in both the rental and sales markets will often lead to upward pressure on property values.

“Supply chain constraints and labour shortages have also dampened the development pipeline, making it unlikely there will be a significant rise in housing stock any time soon.

“Border openings will also weigh on the market, interstate and international arrivals will only add fuel to the demand fire.”


Simon Pressley, Managing Director, Propertyology

“Tasmania’s three largest markets produced outstanding rates of capital growth over the past three years (Hobart 60 per cent, Launceston 80 per cent, and Burnie 70 per cent).

“Launceston is officially one of Australia’s top six of 200 property markets over the past five years.

“Looking ahead, while the rate of capital growth will not reach the same recent giddy heights, the pressure will continue to be more than normal and double-digit rates of capital growth are therefore likely. And the incredible upward pressure on rents is not going away any time soon.

“The Tasmanian economy has been the nation’s best for  four consecutive years and, just this month, produced an all-time record low unemployment rate.

“Community confidence has received an extra boost from the Jack Jumpers remarkable success in its first year of the national basketball competition, plus the entire state are like kids with a lollypop while eagerly awaiting confirmation of entry into the national AFL competition.

“Meanwhile, household finances have never been stronger due to record high values in both home equity and liquidity (huge cash reserves in mortgage offsets and redraws).

“We are anticipating home upgraders, first home buyers, and investors to still be very active real estate buyers in the foreseeable future. The volume of dwellings listed for sale has mildly increased in recent months, but still remains 48 percent lower than five years ago.

Nicola McDougall

Editor, The Female Investor

Chair, PIPA

Main image: DepositPhotos

Nicola McDougall The Female Investor