Ask five experts this question and you might get five different answers, each taking an understandable stance and likely referring to price hikes, supply and demand, cost of living, tighter lending standards, pricing or value fluctuations, inflation, and even wars in faraway countries.
However, some of the fundamental reasons why people buy and sell remain unchanged regardless of market pressures – need for more or less space, relationship breakdown, empty nest, job transfer, lifestyle change and much more.
For the past six months, Diaswati Mardiasmo, chief economist at PRD Real Estate, says she’s never been asked “what should I do?” type of questions.
Its latest real estate report shows how markets across Australia are reacting in different ways to the pressures of 2022.
Of course, what happens in Sydney, Perth, and Hobart are not identical – different markets, different speeds of change.
However, many of the report’s characters Tassie and Hobart jump off the page.
The Home Purchase Time Index shows a decrease in every state, but it’s much larger than most states in Tasmania – it’s down -36.9%.
In the construction sector, the belts seem to be tightening.
In the six months ending March 2022, the report revealed a -10 per cent drop in the value of the residential construction project. Dr. Mardiasmo said this was not surprising given the labor and material challenges faced by the construction sector.
Overall, the state’s residential construction increased 5.4 percent in the 12 months through March but declined -15.8 percent in the past six months.
“This reflects current construction issues, and also contributes to the supply problem with increased demand for homes from local residents and interstate investors,” said Dr. Mardiasmo.
However, home sale prices have remained flexible so far.
The first half of 2022 recorded 6 percent growth in the city, 11.4 percent in the broader metro area, and a 16.2 percent annual average house price change in the regional Tasmania.
Properties in Hobart took longer to sell in May 2022, at 25 days, compared to a pioneering eight days in May 2021.
The average seller’s discount in Hobart – the gap between the initial asking price and the final sale price – widened to -4.4 percent in May 2022, creating an opportunity for some buyers.
The report found that the number of first home buyer loans approved in Tasmania fell -41.1% in the 12 months to March, due to strong property market growth in the second half of 2021 (33 per cent rate) growth across Greater Hobart).
The rental market remains under-supplied in Hobart with vacancy rates as low as 0.3 per cent.
Dr Mardiasmo said the real estate market had entered “unstable times”.
“The year 2022 brings new challenges to the property market, on top of the problems it faced in 2021. The RBA has changed its policy stance while the Federal Government has not,” she said.
“The RBA has changed from expansion to contraction, in such a short time frame, when their message previously was that they were going to be expansionary (not cash rate hike) for a while.
“In the meantime, the federal government remains highly expansive, with schemes and grants available to homebuyers and tax breaks.
“Some of them are due to the change in government.
“As a result, it is as if they are both doing different things, the RBA trying to do it wet But the government stimulates demand with grants and schemes and/or maintains the level of demand.
“Looking ahead, cash rate forecasts in different countries suggest an approach similar to ours, with expectations of a strong cash rate hike for the period 2022-2023, and its stabilization in 2024 and 2025.”