Are we prepared for property prices to go down?
OPINION
You would have to have had your head buried in the sand not to realise that properties are flying off the shelf in Port Douglas. After a flat line of over a decade, prices of properties here have now steeply risen, some by nearly 60% just in the last 6 months.
This increase in Port Douglas echoes the wave that has swept across Australia. It now costs more than $1m to buy a median-priced house across Australia’s capital cities, a 25.2% jump over the past year (Domain House Price Report).
According to this report, the median-priced house in Greater Sydney will cost you a tidy $1.6m, $400,000 more than a year ago, while Melbourne and Canberra both come in at $1.1m. As for Brisbane and Adelaide and a once yawny Hobart, houses are well into the $700,000’s.
The median house price here in Port Douglas joins those of its neighbours by coming in at $700,000 for 3 bedroom and $900,000 for a 4 bedroom (Domain), a massive $186,000 increase from the $514,000 median price in 2020. That’s now a higher median price than Perth and Darwin who are still edging towards the $700,000 price.
Apartment prices are also hitting record highs, albeit at a slower pace.
Much of the demand in Port Douglas has been generated by interstate migrants. With 30,000 people migrating to Queensland, (mostly to escape lockdowns) this created the biggest movement of people since WWII.
Rock bottom interest rates have allowed bigger budgets and with the selling up of more expensive southern property, to attain a house for the same cost as a pokey city apartment, it's a no brainer. Remote working has meant no confines to geography and an emphasis on lifestyle.
Is this growth sustainable?
The Reserve Bank dropped their interest rates to almost zilch to support the pandemic economy, and before deciding to lift them, it is looking to see low unemployment, a healthier level of inflation and a regeneration of wages growth.
The first two are already starting and along with this is the murmur from economists that an interest rate hike could be happening as early as August.
The central bank is holding back and being patient, but the original forecast of rates holding till 2024 now is looking less likely. When interest rates rise, property prices are likely to peak and then back pedal, as potential buyers will be forced to have to borrow less. This affects the chain of property ownership from the ground up.
Finance for Port Douglas properties has been a bit of a minefield. With a 4877, 4873 postcode, financial lenders are wary due to the high deferment of mortgages during Covid. Also, due to the mercurial rise in property prices mortgage valuation algorithms have not kept up with this fast changing market. With an interest rate hike in August this could lead to prices stagnating mid year as the whole cogs of the property ladder start to slow. Economists forecast a possible decline of 5 to 10% due to consumer confidence slowing.
The initial Covid rush has now died down but there are still motivated interstate buyers acting like bargain hunters at the January sales trying to find scarce properties on a somewhat empty market shelf. Due to supply and demand property prices are still breaking records.
But for how long? If you are considering selling your property then the window of opportunity could be closing and to achieve its biggest price potential for a decade many believe the time to move is now.
Rosie Wang is a Port Douglas based Real Estate agent for Property Shop Port Douglas and Mossman.
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