05 Jan 2023 Podcast: Guest – Eliza Owen on the future of the market

It has been wild times in Australian property over the last few years. We’ve had prices at record highs, ‘interesting’ interest rates and plenty of doom and gloom headlines in the mainstream media.

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Podcast produced with Apiro

Please find a Podcast summary below with the interview highlights:

Episode Summary:

Evelyn and Maddie, hosts of You Have My Interest, speak with Eliza Owen, Head of Residential Research Australia at CoreLogic. With extensive experience in property data analysis, Eliza provides valuable insights into the current property market, economic trends, and their interplay with interest rates and inflation.

Key Highlights:

1. Interest Rates, Inflation, and Property Market Trends:

• Cash Rate and Inflation:
  • The Reserve Bank of Australia (RBA) uses the cash rate to control inflation, which is currently at its highest in 30 years.
  • Rapid cash rate increases (from 0.1% to 2.35% in five months) aim to reduce demand by making borrowing more expensive.
  • This impacts property prices, borrowing capacities, and consumer sentiment.
• Property Market Cooldown:
  • National property values are down 3.5% from April peaks, marking the fastest decline since the 1980s.
  • Sydney and Melbourne have experienced sharper declines, with regional and affordable markets beginning to soften as well.
  • Metrics such as longer selling times and increased vendor discounting indicate a market slowdown.

2. Market Opportunities and Challenges:

• First Home Buyers:
  • Falling property prices may present opportunities for buyers with substantial savings, although higher interest rates reduce borrowing capacities.
  • Eliza advises that the right time to buy depends on personal circumstances, not solely market conditions.
• Investors:
  • Rental yields are at record highs due to reduced supply and increased demand, offering opportunities for yield-focused investors.
  • Investors should weigh short-term downturns against long-term capital growth potential.

3. Impact of Covid on Market Trends:

• Covid changed property dynamics, with more people seeking larger spaces or moving into single households, driving rental demand.
• Unprecedented trends during the pandemic included simultaneous high rental yields and property price growth.

4. Property Types and Regional Trends:

• Houses vs Units:
  • Houses saw greater price gains during the Covid boom but are now experiencing steeper declines.
  • Units, often favoured by investors, have been less volatile but offer lower long-term capital growth.
• Regional vs Capital Cities:
  • Affordable markets like Queensland lag slightly behind Sydney and Melbourne in responding to cash rate changes.

5. Outlook for Interest Rates and Housing:

• The cash rate is expected to peak in mid-2023, potentially stabilising the market.
• Longer-term growth drivers include the return of overseas migration and limited housing supply, which may create future under-supply and drive up prices.

6. Advice for Buyers:

• First Home Buyers: Attend open homes and auctions to understand the market. Avoid becoming emotionally attached to one property too early.
• Investors: Consider using professionals like mortgage brokers or buyer’s agents to make informed decisions.
• General Tip: Focus on long-term goals and personal financial circumstances rather than trying to time the market.

Final Notes:

Eliza recommends staying informed through credible sources and regularly reassessing mortgage rates with brokers to ensure the best deal. She encourages listeners to follow her insights on LinkedIn for further updates on market trends.

This episode provides a detailed exploration of the interplay between economic factors and the property market, offering practical advice for buyers and investors alike.