Interest rates continue to increase every month and, at this stage, there’s still no sign of inflation declining. Although it’s unlikely that we’ll see a strong rebound in house prices anytime soon, it’s been surprising that over the last two months, capital city medians in many capital cities have begun to creep upwards again. Sydney house prices are up 1.8 per cent since October, while Melbourne has increased by 2.4 per cent. Perth saw a kick up of 0.8 per cent since October while Hobart is up by 1.8 per cent and Canberra has increased by 2.6 per cent.
While surprising given the level of negativity about the market, it’s consistent with other market drivers. Population growth has started up again and this is putting pressure on housing demand. While it showed up quickly on rental growth, at some point it will also be putting pressure on price growth. Supply is currently being constrained by high construction costs. On the ground, high prices continue to be paid for renovated properties which remain hard to find. The only real opportunities to grab a bargain seems to be unrenovated homes which, given what’s happening to prices, are likely to become more expensive next year.
While it’s easy to get caught up in short term price movements, the reality is that they mean very little to most people given that property is not an asset class that’s easy to buy and sell quickly. Over the long term, where you buy in the cycle matters far less and property has outperformed shares, gold, term deposits and treasury bonds over the past 10 years. This month, we take a look at long term performance of different investment types, including why financially it makes sense to buy, not just as an investor but also as an owner-occupier. For property specifically, we look at the suburbs that have seen the strongest price growth, as well as the commercial property types that have done best.
We hope you enjoy this month’s Ray White Now and we’re proud to be providing you with relevant, timely and interesting content and data in 2022.
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