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Property market update – November 2022


Quarterly House Price Changes Annualised

As shown in CoreLogic’s graph below, price declines seem to be slowing especially in Sydney which seems to be through the worst of it.However, there is still a considerable amount of fixed-rate home loans reverting back to variable by mid-2023. One thing to keep in mind is that although the cash rate is increasing, we have been continually renegotiating our clients rates so that the total rate increase is substantially less than that of the cash rate.Most analysts still predict 5% to 10% further to go from here, but if the RBA resists hiking again in Feb next year, this will help reduce the losses.

Consumer Sentiment dropped to COVID lows
The monthly consumer sentiment index from Westpac and the Melbourne Institute released earlier this month showed a stark drop through November. There is an explicit correlation between consumer attitudes and housing activity. With household confidence at a low, it makes it much harder to make a high-commitment decision such as buying or selling a home. We do expect this to rebound sharply, however, once the RBA pauses their rate hikes, which is expected as early as March.
Australia’s economic recovery:
One of the strongest

The International Monetary Fund says Australia’s economic recovery from the pandemic has been one of the strongest in the developed world with annual GDP growth of 3.7% expected this year.
And while growth is expected to slow to about 1.7% next year, the IMF expects Australia to avoid a recession thanks to domestic buffers including elevated household savings.
“Between the slowing global growth and some still-resilient domestic buffers, Australia is on a narrow path for a soft landing,” the IMF said.
Australia’s household saving ratio over the June quarter was 8.7%, according to the most recent data from the Australian Bureau of Statistics. While that’s the lowest level since the start of the pandemic, it’s above pre-pandemic levels which hovered at around 5% (see image).

Annual wage growth increasing

In more positive news,  Australian workers are seeing their wages grow at their fastest annual pace in almost a decade after the Australian Bureau of Statistics wage price index jumped by 3.1% over the year to September.

With living expenses rising at such a fast rate, it is relieving to see wage growth across the country to soften the hardships from the current wave of inflation. 
Private-sector wage growth outpaced that of the public sector – increasing by 3.4 % versus 2.4% in seasonally adjusted terms. That continues a trend that started in the June quarter 2021.
“Labour market pressures in the private sector combined with the largest Fair Work Commission award increase in more than a decade saw rises in both the size of average wage changes and the proportion of private sector jobs recording a wage change,” Michelle Marquardt, ABS program manager of prices, said.

We are achieved a huge amount of savings for our clients at the moment, taking advantage of the offerings to new customers who are getting huge rate reductions PLUS refinance rebates. Great work to Tom Hawley on a recent JUST SAVED. Get in touch for a free chat if you would like to find out how we can help.
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