Sticky buyers reluctant to make the first move

“In the first quarter of 2024, the most popular question we were asked was: ‘Should I do something now, or do I wait until the (expected) cash rate cut?” said chief economist Dr Diaswati Mardiasmo.

“The question we are now being asked has changed to: ‘How many more months do I have before something else (i.e. a cash rate hike) happens?”

In her opinion, crystal ball gazing about future cash rate decisions can only get Australians so far.

“For now, it looks like all we can do is hold on tight and make the best financial decision for your own needs, as we ride out the different gears of each property market,” said Mardiasmo.

While there are some trends emerging across the nation – such as a rise in investor financing and a static vacancy rate – the economist emphasised that Australia is witnessing a multispeed housing economy.

Using a traffic light analogy, Mardiasmo noted that different regions are witnessing vastly different market conditions.

“At present, there are many moving pieces in the economy, evident in the variety of red (danger), green (go), and orange (cautious) traffic light indicators throughout the report. For once, there is no one dominant colour,” she said.

“We are seeing local areas still recording price growth, yet simultaneously other areas are recording declining prices.”

For instance, Melbourne, Hobart and Darwin are at the bottom of their housing cycles, while Perth and Brisbane are nearing the peak.

Looking long term, Mardiasmo warned that Australia’s housing woes are unlikely to resolve anytime soon.

“From a housing supply perspective, we will be in deficit for some time,” she said.

While she acknowledged the “record high” amount of government funding committed to boosting housing supply, she warned: “The devil is in the details, however, as there is a big difference between millions of dollars being committed to increasing housing stock and having private residential projects coming out of the ground.”

For Australia’s young aspiring buyers, the outlook is unsurprisingly gloomy.

“Housing affordability Australia-wide has declined by -15 per cent over the past five years,” the economist noted – higher than any decline seen in the past 20 years.

“This means those who bought a property in the past five years are ‘worse off’ economically and in greater danger of mortgage stress, as opposed to those who bought property 10 to 20 years ago.”