Property market surpasses $10 trillion valuation in the first quarter of 2022 ahead of interest rate hikes

Australia’s property market surged through what proved to be the final throes of the boom in the first quarter of 2022.

Michael and Catherine Sullivan are hoping to downsize by selling their Alderley home in Brisbane’s north. Picture: Lyndon Mechielsen

As the stockmarket dives, Australian homeowners are reaping the rewards of the largely stable property market, which surpassed $10 trillion for the first time through the first three months of the year.

Over the past two years, housing prices nationally rose more than a quarter in what was the fastest boom in more than four decades.

Through the final throes of the increases in the March quarter, the country’s 10.8 million homes increased by $221bn in the first three months of the year to bring the total market valuation to $10.17 trillion, according to the Australian Bureau of Statistics.

The revelation coincided with $100m being wiped off the Australian sharemarket on Tuesday, which PropTrack’s director of economic research Cameron Kusher said reinforced the adage “safe as houses”.

“I think the fact the total value of housing is so high really just shows that a lot of Australians have a preference for holding their wealth in residential property,” Mr Kusher said.

“Given what you’re seeing on the sharemarket at the moment, you don’t see that extreme level of volatility … and I think that’s why people have a preference for housing as opposed to equities or other investments.”

More than half (56.7 per cent) of household wealth is tied up in Australia’s property market and represents nearly two-thirds of the bank balance sheet, according to data house CoreLogic.

The average cost of a residential property sat at $941,900 for the quarter, a rise of $16,600, reflecting the total value of the market rising $1.8 trillion in 12 months.

Most market and bank economists are anticipating property prices to fall up to 15 per cent over the next 18 months, with some reversal in gains already being seen in Sydney and Melbourne.

That hasn’t stopped some investors turning back to residential holdings over the past 12 months, with lending to the group up 37 per cent to represent about one-third of the market. The change comes off the back of significantly low investor buying levels through the pandemic.

Brisbane Ray White Wilston agent Jessie Hall said the spike in weekly asking rents – up more than 10 per cent in the past year nationwide – had made investing in bricks and mortar attractive again. “Investors are certainly reacting to the market,” she said.

A stockmarket crash could help to prop up the housing market, said the managing director of SQM Research, Louis Christopher. “The Reserve Bank will be forced to either address inflation first or supplement the economy, it’s hard to do both,” he said.

“If it really looks like we’re going into a recession, they will support the economy. In that environment, you would see the housing market bottom out.”

Either way, Michael and Catherine Sullivan are hoping to downsize from their home of 29 years. It is a happy coincidence the Brisbane market looks to peak as they sell up. “We aren’t too concerned about how the market moves so long as we get a lovely family to move in,” they said.

Originally published as Property market surpasses $10 trillion valuation in the first quarter of 2022 ahead of interest rate hikes