How to spot a turning housing market

So you want to buy, upgrade or downsize, but you’ve been waiting for the right time to take the plunge. We get it – taking the next step is a big deal, and timing can be crucial.

There has been plenty of talk over the past year about the housing market turning, with varying degrees of certainty. But since the new year, it seems that all the key market indicators have been lining up, pointing to a genuine change in conditions.

“How can you tell the housing market is turning?” we hear you ask, “and why does it matter?”

To help you get an understanding of this changing housing market, we’ve broken down the top four signs in non-economist lingo.

1. More people = more demand

WA’s population growth is the strongest it’s been in over 4.5 years according to CBA. With more people living in our state, there is a greater demand for housing, causing house and land prices to rise.

2. Nowhere to rent

As anyone trying to find an affordable place to rent will know, they’re becoming harder to find. When a population expands, the rental market gets squeezed leading to scarcity and price hikes. REIWA recently reported rental availability has dropped to a 7 year low of 2.5%.  When renting becomes a harder and more expensive option, people turn to buying a home.

3. More demand for land

It seems obvious, but one of the best ways to tell a turning market is looking at the demand for land. Nationally, residential lot sales have increased by 45.9% since March 2019 according to HIA. When demand increases, land becomes less available which leads to increased prices. We’re already seeing this in WA, with Perth land prices increasing by 4.1% in the year to the end of September.

4. People are buying 

The biggest indication that the housing market is turning is quite simply that people are buying houses at a far quicker rate. New home sales in WA have risen faster in the three months to the end of November than in any other state, at over 14% according to HIA.

Whilst the housing market certainly appears to be turning, there’s no need to panic. After such a prolonged downturn, the market is likely to recover at a steady pace so there is plenty of time to get your ducks in a row.

Now is the time to start thinking about your next steps – start researching, budgeting and getting out to display homes for inspiration. With the market as good as its ever going to get, it’s worth being on the front foot.

We’ll be back next week to talk through the “so what” of a housing market on the move. Stay tuned!