Green shoots for the housing market?

Asking prices are beginning to pick up again in some of the suburbs hit hardest by rising interest rates

Green shoots for the housing market?

Asking prices are beginning to pick up again in some of the Sydney and Melbourne suburbs that were impacted most by rising interest rates, a trend that experts say could signal a recovery for the broader housing market.

An analysis by Suburbtrends found that some markets that have been declining for more than six months and by at least 15% are now posting rises in asking prices as inventory levels fall, The Australian Financial Review reported.

“By tracking the month-on-month changes in both inventory and asking prices, we can see some green shoots appearing,” Suburbtrends founder Kent Lardner told AFR. “As every month passes, we nudge closer to the bottom of the market. While I can’t guarantee that these suburbs will continue to have positive growth moving forward, the evidence suggests they may have reached the end of the downturn.”

Lardner said that the analysis saw potential signs of recovery in Northwood and Greenwich on Sydney’s lower north shore, Newtown in the inner west, Marsfield, West Ryde, Cheltenham and Schofields in Sydney’s north-west, Little Bay in the east and Turramurra on the upper north shore.

In Northwood, for instance, asking prices for a house have risen to an average of $5.1 million, up from $4.3 million a month ago. Inventory levels have fallen by 1.2 months and prices have dropped by 20% in the past 12 months, AFR reported.

Asking prices spiked by $343,000 to hit $2.37 million in Marsfield, rose by $310,000 to $3.8 million in Greenwich and by $80,000 to $2 million in West Ryde.

Bronwen Lipscombe, a selling agent with McGrath Wahroonga, told AFR that prices in the lower to middle-range segments have begun to turn around.

“Properties priced below $2 million have already come back, likely due to the government’s land tax policy for first-home buyers,” she said. “The young family segment is certainly bouncing back as people are starting to realise that the market will turn upward again at some stage and that now is probably the lowest point in the market. Prices have probably fallen by about 15%, but the stock available on the market is down by 40%, so prices aren’t falling any further – which means that they’ll go up again. The only thing holding the market back is just people’s affordability.”

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A survey by SQM Research showed that asking prices have risen by 8.5% in the past four weeks in Sydney’s eastern suburbs, as listings fell by 3%, AFR reported.

“There have been signals that Sydney’s eastern suburbs have entered into this recovery, particularly for free-standing houses,” said Louis Christopher, SQM Research managing director. “It is also noted, that on SQM’s leading indicators, there has been a moderate rise in the auction clearance rate for Sydney, particularly for the eastern suburbs.”

Selling agents told AFR that they had seen a change in sentiment among buyers and sellers since the Reserve Bank started slowing the pace of its rate hikes.

“We’ve definitely seen that in the past three or four weeks,” said Alexander Phillips, partner at PPD Real Estate. “So we’re starting to see more buyers enter the market and more transactions going through. A lot of vendors who want to get premium prices aren’t selling so that’s probably taken out about a third of the listings, which is also helping the market stabilise.”