Last Updated: 10th April, 2024

What Does The Stabilising Property Market Mean For First-home Buyers?

Published by Otto Dargan on May 2, 2023
After nearly a year of increasing interest rates, the Reserve Bank of Australia (RBA) paused the hikes in April 2023. This decision raises expectations of a stabilisation and this could attract more first-home buyers to the housing market.

Signs Of Property Market Stabilising

There are actually several indications that the property market may be stabilising:

Rising Auction Clearance Rates

The combined auction clearance rate in the capital cities of Australia rose from 61.5% to 68.1% between the second and third weeks of April. It has also remained above the decade average for six of the past eight weeks. The number of auctions in Australia’s two largest markets, Sydney and Melbourne is trending up. These positive improvements indicate that buyers are gaining more confidence.

Easing Rate Of Decline

CoreLogic’s National Home Value Index (HVI) showed a sharp reduction in the rate of decline in home values in February and it recorded a 0.6% increase in March, marking the first month-on-month rise since the previous year’s April. CoreLogic research director Tim Lawless noted that the housing market has stabilised already, due to factors such as the extremely tight rental conditions, increased demand from overseas migration, and the rise in auction clearance rates.

Stronger Demand For Housing

CoreLogic states that there is growing demand for housing, amid limited supply. Despite high interest rates, first-home buyers are opting to buy homes because of a tight rental market and rising rents. This is reflected in the higher auction clearance rates, and in CoreLogic’s modelled sales volumes, which increased by 10.4% in March. Property listings have also increased, possibly due to the RBA’s decision to pause the cash rate hikes before raising the rate to 3.85% in May.

Home Prices Are Recovering

As a result of this increased demand, home values have started to trend higher. CoreLogic’s national daily HVI has risen 0.9% since early March, and this uptick in dwelling values has been observed in around 35% of suburbs analysed in the March quarter. CoreLogic’s daily index also shows the Sydney market has rebounded since hitting its lowest point in the first week of February. It has since increased by around 2%, while Melbourne hit its lowest point in early March and has since picked up by 0.7%. Experts suggest this is a sign of a further upswing in the market but prices may still fall if interest rates continue to rise.

Improvement In Consumer Sentiment

Despite the overall confidence level remaining relatively weak – 10.4% below April last year – the Westpac-Melbourne Institute’s recent report showed that the Consumer Sentiment Index improved by 9.4% this April, compared with March, following the RBA’s decision to pause the cash rate hikes.

Don’t Miss This Opportunity!

We can help you secure your dream home in a stabilising market. Contact Home Loan Experts’ mortgage brokers now for a clear idea of what’s happening and how we can help you secure a home. Call us on 1300 889 743 or fill in our free online assessment form before it’s too late.

What Does This Mean For First-Home Buyers?

Buyers can take advantage of the current market conditions as interest rates stabilise and home values rise. Here are some factors in first-home buyers’ favour.

Cash Rate Is Closer To Its Peak

Recent statements and actions from the RBA suggest that the cash rate has either peaked or is nearing it. This is good news for first-home buyers, as it means they may not have to worry about rising interest rates and the cost of borrowing may not go up further.

Home Prices Are Likely To Be At Or Near The Bottom

The recent increase in the HVI in March indicates that home prices are probably approaching or have already reached their lowest point. This would allow first-home buyers to look for a home without feeling the pressure of prices going up. Despite recent positive signs in the property market, experts caution that it is too early to say the market has hit its bottom. Potential risks such as future interest rate increases and homeowners transitioning from lower fixed interest rates to more costly repayments may affect the market’s recovery.

Things To Consider

First-home buyers can make informed decisions by considering the following:
  • It’s challenging to pick the bottom of the market, but getting close is still good enough. Research the market to understand the current trends and prices.
  • The recent increase in home prices could be just a slight reversal; it’s unclear if prices will continue to rise or drop later. It depends on the economy.
  • Changes in the NSW stamp duty policy mean no stamp duty for properties worth up to $800,000 and concessions for properties valued between $800,000 and $1 million could have a significant impact on first-home buyers in the Sydney market.
  • It’s best to be pre-approved and actively searching for properties, as those who are prepared will have an advantage.
  • Look for areas that have experienced a more significant decline in prices, as they may offer better value for money.
  • Negotiate with sellers to secure a lower purchase price or other favourable terms. Be patient and avoid making impulsive decisions to ensure the best long-term outcome.

  • Don’t Wait Any Longer!

    Ready to take advantage of the current housing market and become a homeowner? Don’t let the opportunity slip away. Contact us now at 1300 889 743 or fill out our free online assessment form to get pre-approved and start your journey towards owning your dream home.