Market Observations
Senior economist at Oxford Economics Australia, Maree Kilroy, noted that the reduction in new home listings has led to a decreased supply of real estate and a return to price growth in markets such as Sydney, Melbourne, and Perth. However, she warns there is no certainty that price growth will continue throughout 2023. Kilroy points out that it is too soon to rule out the impact of rising interest rates on at-risk borrowers and their potential to affect property prices on the back half of 2023.
The Struggling Home Building Sector
The lending slump has also affected the home building sector, with a sharp decrease in loans to construct dwellings. In April, only 2,546 loans were approved, marking a historical low. The current demand for housing seems to be outstripping supply, and there is limited development in the sector to make up for the deficiency.
Final Thoughts
Overall, the decrease in homebuyers borrowing in April is a reminder of the impact interest rates and supply can have on the demand for housing. While we are witnessing price growth in some markets, we cannot ignore the struggles of the home building sector and at-risk borrowers. The future remains uncertain, and it will be interesting to see how the market adjusts in the coming months.
