It would be fair to say Australia’s property and construction sectors have been on a bit of a rollercoaster ride over the past few years. Property prices saw some of their highest values through COVID. Meanwhile, many construction projects were put on pause while labour shortages and supply chain issues caused havoc. As we come out the other side of those extraordinary years, what’s the outlook for the multi-unit building market at home?
More Australians than ever are dreaming of #flatlife and community living than ever before. Aspirations for a four-bed family home on a quarter-acre block in suburbia are morphing into cosmopolitan yearnings and hankerings for the convenience of city life. Yet the years of COVID drove many to rural areas and the cost of that extra space skyrocketed. In fact, the IMF called Australia’s property market one of the more misaligned and expensive in the world.
Property prices are falling
All around the world, reports of plummeting property prices are being published. It’s a similar story at home too. Property prices are coming down. Fewer approvals for new dwellings, both public and private, are being given. But the reasons for these events at home are a little different to the rest of the globe.
While the rest of the world is a buzz with expectations for a crash, Australia is instead expecting a downturn. That’s thanks to the hiking interest rates – higher than they’ve been for a decade.
It’s not a lack of appetite for property investment, rising unemployment or even a slowdown in the demand for residential property — multi-unit buildings and single-family dwellings alike— that’s driving the downturn. All of those elements are in place and healthy too.
Australian multi-unit buildings and homes will stabilize
Many are predicting high yields, strong comparable growth and a weaker Australian dollar will attract offshore investors in 2023. Falling prices are already beginning to slow. The Head of Research at CoreLogic expects investment and interest in the multi-unit building market, residential homes and other types of property will increase once interest rates begin to come back down. Most predict this will be around the end of 2023 or the beginning of 2024.
The upshot will be renewed interest in emerging asset classes. Properties such as Build-to-Rent, multi-unit buildings and student accommodation will attract buyers and investors. The recovery of the travel and tourism sector will bouy this interest, not to mention the re-opening of immigration doors and higher rates of immigration.
It’s been a funny few years for property and construction in Australia. That said, it’s been a wild ride for most of us. And although the rest of the world is experiencing dropping property prices, rising cost of living, and are preparing for a “global mini-crash”, it’s unlikely Australia will follow suit. Inflation hasn’t run away as far, or as fast at home as it has in the US and Europe. Coupled with the fact that Australia enjoys close links with Asia, the future is looking brighter for multi-unit buildings in Australia and the Asia Pacific Region than anywhere else in the world right now.