- Demand for property hits another new peak in July
- Lending rate rises will limit price growth despite demand
According to the REA Property Demand Index, after a choppy few months, demand surged again in July with even the struggling WA market starting to hit its stride. Only one section of the Australian market, NSW apartments, saw a slight drop in demand.
Chief Economist Nerida Consibee said, “Given that the state has been seeing decades of housing undersupply, this is surprising, but it has more to do with affordability concerns impacting demand levels, rather than people not wanting to buy.”
Tasmania remains the standout performer, seeing far more people looking to buy than the number of available properties. From both a buyer’s and renter’s perspective, demand is high, which may support new development in key areas. “Hobart is the only capital city in Australia where we haven’t seen a building boom and demand levels suggest that now may be the time to start increasing housing supply,” says Conisbee, “Given the size of the market, it may not need many projects to lead to a better balance. The continued increases in demand would suggest that we will see more price growth, but it’s likely the continued lending rate rises will be the limiting factor. ”
South Australian demand levels hit a new peak in July and while growth is subdued and below the Australian average, it remains steady; with rental demand growth looking strong “This is often an early sign of jobs growth, so it may be that the jobs market in South Australia is doing better than official figures suggest,” says Conisbee.
It also appears that demand for Australian property from foreigners has slowed slightly. “We’ve seen a slight drop in property seekers from overseas on realestate.com.au in recent months, likely driven by more taxes aimed at foreign buyers and greater challenges for them to access finance.”
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