Melville Market Wrap April 2023…
We reported in the March quarter that interest rates are on hold, but for how long? Well not long, because yesterday the RBA increased rates by .25% in what many are calling a bizarre move and I for one can’t find a consistent stream of logic from them. However, in my opinion it’s not enough to send prices into a decline.
Let’s hone in one of the biggest factors – stock levels! To put this in context, Perth needs around 13,000 properties for sale to meet average demand. In April Last year we only had 8,000 properties for sale but last week this dropped to only 6,500 properties for sale. Simply put, there is a major supply / demand imbalance. Yes, rate rises have tightened up budgets, inflation’s having an impact and consumers are spending less but there’s still strong demand in Perth and nowhere near enough stock.
So where does the solution to come from?
There doesn’t appear to be a clear-cut way out of it yet – building new dwellings takes time and new building approvals are moving slowly.
Recent modelling by the National Housing Finance and Investment Corp suggests there will be a shortage of approx. 100,000 properties nationally from 2023 to 2027, and Perth would face the greatest shortfall.
Maybe some pressure will be alleviated when the low-rate fixed mortgages come to an end but bare this in mind – those people selling will still need somewhere to live and many will look to buy again. So we may see some additional supply, but that will come with additional demand.
The perfect storm continues in 2023 but there are ways to navigate it. You are most welcome to give me a call about Alfred Cove real estate, otherwise I look forward to updating you next month.
Jame Priestly 0447 120 125