While interest rates and affordability have dominated the headlines, most home buyers are increasingly focused on access to transport, lifestyle and community when making their purchase decision according to the latest Herron Todd White (HTW) Month in Review.
In the April report, HTW Director Perron King said with interest rates now reaching a peak, buyers may return to the market with renewed confidence, seeking out property that fits their personal needs.
“Purchasers are increasingly taking into consideration the position of a property in relation to public transport links, particularly in the larger eastern capital cities of Melbourne, Sydney and Brisbane,” Mr King said.
“Being within a five to 15-minute walk of a metro rail station, agents tell us, is becoming a popular purchasing factor for the full range of suburbs, both inner and outer, as our cities continue to grow and road traffic becomes increasingly congested.
“In other cities, the lifestyle factors shift.
“For example, Perth, being the sunniest capital in the country and blessed with some of the world’s best beaches, some buyers are motivated by the outdoors and being within close proximity to the coast together with desirable amenities of cafes, established schools and shops.”
Mr King said suburbs with a community feel were increasingly popular.
“Areas such as bohemian Fremantle in Western Australia, Brunswick in Melbourne and cosmopolitan Marrickville in Sydney are draw cards for purchasers who want to live amongst a like-minded community,” he said.
Sydney
HTW Director Shaun Thomas said first-home buyer activity was picking up across Sydney, which was keeping land values high.
“We have seen a five to 10 per cent decrease in land values in new housing estates in the past six to eight months, however, prices are still higher than this time in 2021, with an incredible uplift in land values in the preceding 12 months to April 2022,” Mr Thomas said.
He said downsizers in the prestige market had also been active, while affluent areas, such as the North Shore, were also attracting attention.
Melbourne
HTW Director, Perron King said despite higher interest rates, a diverse range of opportunities existed for homebuyers to enter the Melbourne market.
“First homebuyers are expected to struggle on their deposits and repayments, thus will continue to migrate to Melbourne’s outer suburbs to source affordable houses,” Mr King said.
“Buyers with families may turn to established dwellings where amenities and schools are in close proximity. In a similar instance, retirees are looking to downsize into established dwellings where little to no work is required and amenities are nearby.”
Mr King said a drop in buyers’ borrowing capacities, along with the rising cost of living, had contributed to the regression in house prices.
Established suburbs like Croydon, which appeal to younger families, had seen prices decline, while new estates continued to open or expand as first homebuyers took advantage of government incentives to secure a new home.
Brisbane
HTW Director David Notley said demand was varied across the different types of properties in Brisbane.
“Renovator-style properties and vacant land are both seeing slightly softer values, no doubt due to increased building costs and construction time delays,” Mr Notley said.
“Conversely, completed homes that require no further maintenance or upgrade are keenly sought by homebuyers.
“They simply want to move in and enjoy. This is premium property at the moment – close to the CBD and with great schooling and other infrastructure all within reach.”
He said one of the stronger performers was attached housing.
“Units offer a relatively affordable alternative to renting in many of the near-to-CBD suburbs,” he said.
Mr Notley said prestige properties in the inner city were undersupplied, had strong fundamentals and buyers less affected by higher interest rates.
Adelaide
HTW Property Valuer, Nick Smerdon said prices were declining across Adelaide with the market driven by a mixture of buyer types.
“These are made up of first homebuyers who missed out during the peak of market activity, upsizers who need to buy out of necessity, downsizers who have less reliance on lenders and investors looking for a market with a track record of stability during a national downward cycle,” Mr Smerdon said.
“First homebuyers are most active in the sub $1 million price bracket.
“Except for the inner ring, properties priced below $1 million are available throughout the metropolitan area.”
Mr Smerdon said downsizers were also active across the metropolitan area, within the middle and outer rings, at the sub $800,000 price point whilst in the inner ring buyers were active up to $3 million.
Perth
HTW Director Chris Hinchliffe said a mixture of buyers were active across Perth.
Outer northern suburbs are dominated by first-home buyers, while middle ring areas in the north are popular with owner-occupiers who prefer renovated and well-presented properties.
Investors have been focused on upper north and lower south areas where prices are affordable.
“Modern or recently renovated stock that appeals to buyers most, with construction issues making renovating and building far from attractive propositions,” Mr Hinchliffe said.
Darwin
HTW Valuer Jeremy Callan said values were holding steady and sales volumes remained consistent across Darwin.
He said first-home buyers were active and focused predominantly on price.
Investor activity is ramping up given the high yields on offer when compared to other states.
Canberra
HTW Assistant Valuer Kush Sen said entry-level prices had increased to almost $500,000, which was almost out of reach of first-home buyers.
“Traditionally there is little capital growth in the unit market with buyers opting to upgrade to townhouses and houses,” Mr Sen said.
“Investors particularly are willing to upgrade to increase the capital growth and liveability.”
He said families needing to upgrade to something bigger would find it difficult following recent interest rate increases.
“Buyers are opting to renovate or extend their current homes due to these interest rate rises which have slashed buyers’ borrowing capacities,” he said.
“In the prestige market we are seeing relatively stable prices which reflects the demand for prestige housing, particularly in areas such as Deakin, Griffith and Yarralumla.”
Hobart
HTW Valuer Mark Davies said higher interest rates and cost of living pressures diminish returns for investors and that’s why there are very few active potential investors in today’s current market.
“A leading Eastern Shore real estate agent told me recently that he hadn’t sold a property to an investor for eight months until midMarch when he sold two,” Mr Davis said.
“Downsizers appear to be active throughout Hobart and surrounding suburbs as they cash in their McMansions for something more manageable in their twilight years.
“Lower priced suburbs (sub $650,000), particularly in the northern suburbs of Hobart, are still an attractive option for first homeowners.”
He said vacant land prices have taken a pretty big hit with the high interest rates, increased construction costs and labour and material shortages.
“In some cases, we have seen a ten per cent reduction in prices from blocks that were purchased at the peak of the market,” he said.
“Some agents are saying they can’t give vacant land away at the moment.”
