Despite property values starting to fall in the larger capital cities, there are still multiple locations around the country that are likely to still see price growth, according to an expert.
Founder and Head of Research at InvestorKit, Arjun Paliwal said the outlook for many markets around the country remains solid even as interest rates rise and values in Sydney and Melbourne decline.
“Australia’s property outlook is far from weak,” Mr Paliwal said.
“Despite the last two years of nationwide blanket capital growth being over, Australia’s outlook for housing is still strong, with 17 of 25 housing market fundamentals ranked as either strong or very strong.
“Australia’s housing fundamentals are quite resilient to the rate hikes; different states’ and cities’ market cycles are diversifying rather than following a blanket approach of capital growth many are used to over the last two years.”
According to Mr Paliwal, there are a number of markets around the country that are currently experiencing strong demand while supply remains tight.
Mr Paliwal said both Adelaide and Darwin and still in the midst of strong price growth.
“Greater Adelaide’s sales market is experiencing high pressure due to quarterly asking sales prices for houses increasing by 1.3 per cent, while total listings have dropped by 4 per cent over the last quarter.
“Rising house prices when there is minimal stock provides competition in the market and indicates the city will continue to see outperformance in comparison to its peers.
“Paired with the very high pressure in the Adelaide rental market, with vacancy rates at a 0.3 per cent crisis level, the lowest in more than 15 years, Adelaide will remain well insulated with this low supply.
Meanwhile, Darwin’s house sales prices have increased 3.8 per cent over the last quarter, and the number of sales listings has risen 1.7 per cent over the last quarter according to Mr Paliwal.
“Monthly sales volumes have been stable, as well as vendor discounting rates; all of which indicate high market pressure,” he said.
“Pressure in Darwin’s rental market is also very high, with vacancy rates dropping to its lowest levels since 2012, at 0.4 per cent.
“As a result, the median rental price has grown by 15.4 per cent in a year.”
There are also a number of regional locations across QLD that are expected to see upward pressure on prices including Townsville, Toowoomba, Ormeau-Oxenford, Rockhampton, and Bundaberg.
Meanwhile, Shepparton in Victoria and Launceston in Tasmania are the standout markets from the cities that are already experiencing median price falls.
Mr Paliwal said that while there might be more growth left in certain areas, investors shouldn’t expect to see a return to the conditions that we’ve experienced over the last few years.
“Our outlook remains positive; however, one should not confuse a positive outlook for a market where everything continues to grow by more than 20 per cent per year in almost every city,” he said.
“Those times are over and are not sustainable.
“Early last year, 22 of 25 housing market fundamentals ranked as either strong or very strong.
“A drop-off to 17 has occurred, however, still a positive number.
“Any weakness we currently see is expected to be short-lived due to these remaining healthy housing fundamentals.”