DESPITE property prices falling from their peak, data reveals it remains a positive time to sell for many homeowners who bought pre-pandemic.
The recent PropTrack Home Price Index showed that those who purchased property before the pandemic would still make a healthy return on investment if they were to sell today.
The report revealed that while home prices nationally have fallen 4.51% from their peak in March 2022, prices remain 28.5% higher than pre-pandemic levels.
“For those that purchased their home pre-Covid, in most parts of the country home prices are still up a significant amount compared to three years ago, even with the recent downturn,” explained senior PropTrack economist Eleanor Creagh. Ms Creagh highlighted Hobart, Brisbane and Adelaide as the capitals that have experienced substantial price growth since the pandemic, with prices in these cities still up more than 40% on pre-pandemic levels, according to the most recent Home Price Index.
Regional areas have experienced even stronger growth, with home prices up more than 50% on pre pandemic levels in some regional territories.
“This means that even as house prices fall, there is a substantial buffer, given that after that significant rise, many existing homeowners are sitting on a substantial level of home equity,” she said.
While conditions are favourable for those who bought before the pandemic, the situation differs for those who purchased at the peak of the market.
“For those who bought at or near the peak in 2022, their home is likely to have declined in value relative to when they bought, but this is a very small percentage of homeowners,” said Ms Creagh.
“There was a cooling of double-digit price growth and a moderation in market activity, and home price growth slowed from the fast pace recorded throughout much of 2021.
“Property price growth then slowed down quickly in 2022, before national home prices peaked in March 2022. As 2022 progressed, interest rate expectations and then the fast pace of rate rises that eventuated, were the primary driver of slowing and then falling home prices,” she said.
While national home prices have fallen for the 10th month in a row, experts believe the worst of the downturn has possibly passed.
However, Ms Creagh added that prices will likely continue to decline through 2023, but at a slower pace with interest rates on the rise, mortgage servicing costs climbing and maximum borrowing capacities further reduced.
REGIONAL SUBURBS LEAD GROWTH
Throughout Covid, many buyers moved to regional and coastal suburbs, which led to both a short supply of property and increasing prices, according to the latest average estimated value (AVM) data.
“While increasing borrowing costs are a headwind for prices, regional markets continue to exhibit a lesser pace of price falls,” said Ms Creagh.
“They remain buoyed by shifting lifestyle priorities, migration trends, and affordability advantages that are still in play.
Over a three-year period, AVM data shows that prices have grown significantly in some regions.
The top price growth suburb nationally for houses was Jindabyne in the Snowy Mountains.