It is so disheartening that after the global uncertainty we’ve been through with the pandemic, and right when we’re turning the corner with our international border reopening, we are now faced with the consequences of Russia’s invasion of Ukraine.

Not only are we seeing heartbreaking images of devastated cities and thousands of displaced families seeking refuge, the invasion is also having global trade ramifications that are directly disrupting what we thought would be a period of worldwide economic recovery. 

Closer to home, we’re grappling with a natural disaster that is more far-reaching than we’ve ever seen before. Our hearts go out to every Australian impacted by this extraordinary weather event. 

This week I’d like to share some observations of mine for the East Coast property market. 

Overall, I think we’re in for another good year or year-and-a-half, then I think we’ll start seeing market activity slowly come back. For now, the drivers are good. Interest rates are going to go up a bit but they’re still at record lows, and the economy seems quite solid. 

These are macro factors benefitting every market, which is why we’ve seen a rare and sustained pattern of house price growth in city and regional markets alike for some time. What’s happening in 2022 is we’re now seeing a bit of diversity in that growth. 

In the month of February, CoreLogic recorded the first fall in Sydney home values since September 2020 (by only 0.1% though) and no growth at all in Melbourne. In contrast, home values grew by 1.8% in Brisbane, 1.2% in Hobart and 0.4% in Canberra. In regional areas, it was 1.5% in NSW, 1.2% in Victoria, and 1.9% in Queensland and Tasmania. 

There’s been some media commentary in Sydney and Melbourne about those big city markets cooling, but it’s never really that simple. 

Large cities the size of Sydney and Melbourne are comprised of hundreds of suburban markets, and they don’t move in unison when market conditions change. 

What we typically see is a patchwork effect, with prices softening in certain pockets first while other pockets continue to perform strongly. That’s what we’re seeing now in Sydney and Melbourne, and that’s what is contributing to slower growth citywide. 

Sydney and Melbourne buyers on a budget would be wise to watch local values in the suburbs they are targeting very closely for opportunities over the coming 12 months.  

As markets cool, local factors become more important in driving local home values. Things like new infrastructure and returning migrants will boost some suburban markets more than others. 

CoreLogic recently assembled this chart showing the areas with the highest average net inflows of overseas migrants over the three years to June 2019, prior to the pandemic. 

With the international border reopened, it’s logical to assume these historically favoured areas will once again experience strong migrant demand. The inflow of new residents is likely to affect rents first, then housing values over time. 

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Source: McGrath Estate Agents

If you are thinking of selling, talk to an experienced local expert who can give you a proper picture of what’s happening in your neighbourhood’s own unique property market. 

John McGrath – When is the right time to buy in this market?

John McGrath – International border reopening will impact the home advantage for inner city buyers

John McGrath – Unprecedented price growth in East Coast regional markets set to continue