Trying to Predict When Prices Will Rise? Here Are 3 Indicators To Watch In Your Market

Attempting to predict when property prices will rise can sometimes be like shooting in the dark with a blindfold on. However, astute homebuyers are keeping a watchful eye on certain key indicators that are historically very good leading indicators to property price movements. As experienced buyer's agents, we too are keeping a keen eye on these indicators to position our clients in the best way possible. So, what are they? 

Listing Volume: A Pulse on Supply and Demand 

One of the most telling indicators of potential price shifts is the listing volume, which refers to the number of properties available for sale in a given market at a given point in time. A decrease in listing volume often suggests that supply is tightening, which can exert upward pressure on prices due to increased competition among buyers. When the number of properties for sale dwindles, motivated buyers may find themselves vying for a limited selection, leading to possible bidding wars and, subsequently, price escalation.  

As of writing, supply in Newcastle is incredibly tight. We as local Buyers Agents are finding the lack of quality properties is so acute that buyers who are in the market are almost getting a sense of FOMO. We track these numbers closely, so with about 19% lower than average listing volumes at the moment, its likely we’ll continue to see prices rise in the short term. 

When supply is tight, choice is limited, so its important to establish an effective negotiation strategy.

Interest Rates: The Impact of Borrowing Costs 

Interest rates play a pivotal role in the real estate market, influencing the affordability of properties for prospective buyers. When interest rates are low, borrowing costs decrease, making mortgages more attractive (think back to the COVID era of ultra low interest rates). This tends to stimulate buyer demand, as purchasing a property becomes more financially feasible. As buyer demand intensifies, competition can grow, potentially leading to price appreciation. This is particularly relevant for where we are currently in the interest rate cycle. The Cash Rate, determined by the Reserve Bank of Australia, is currently sitting at 4.1%, the highest its been in over a decade. This is causing borrowers to cut costs in order to afford mortgage repayments and is naturally reducing buyer demand. As interest rates dip in due course, this is likely to stimulate buyer demand which results in price appreciation. 

Buyer Demand: Understanding Market Sentiment 

Buyer demand is a direct reflection of consumer sentiment and economic conditions. An increase in buyer demand often suggests a positive outlook on the real estate market, as more individuals and families aspire to buy & invest in property. This heightened demand can contribute to price appreciation, especially if supply remains relatively constant. 

Buyer demand is influenced by various factors such as job growth, demographic trends, and overall economic health. As regions experience population growth and increased economic activity, demand for housing tends to rise. By keeping a pulse on these macroeconomic factors, buyers and investors can better predict potential price movements. 

So, while predicting precise price fluctuations in the real estate market is challenging, paying attention to key indicators can provide valuable insights, especially given the circumstances we find ourselves in at the moment. Listing volume, interest rates, and buyer demand are three crucial factors that can offer a clearer picture of market trends.

Our expertise lies in interpreting these indicators to guide our clients in making informed decisions, ensuring they navigate the real estate landscape with confidence. Find out how we’ve helped our clients enter the market here.