Why FOMO is making a return to the market

House prices are on the rise again, and even a recession may not get in their way. Here’s why.

This designer Palm Beach home is listed via an expressions of interest campaign.

ANALYSIS

Buyers, beware — FOMO is back.

FOMO, or ‘fear of missing out’, was one of the biggest drivers of the pandemic boom, when buyers were pressed to snap up homes, often sight-unseen, amid heated competition and soaring prices.

But the downer of rising interest rates saw that replaced with the fittingly less-sexy acronym, FOOP, or fear of overpaying.

Yet while the Reserve Bank of Australia (RBA) may not be done with its aggressive rollout of rate hikes, property prices are firmly on the road to recovery after a lull through to the first months of this year.

Big-ticket recent sales include 126 Amalfi Dr, Isle of Capri

A slowing construction sector and trigger-shy vendors are among factors constraining supply, one half of the equation underpinning house price movement.

On the demand side is population growth, with the latest Little Hinges Sight Unseen report showing the Gold Coast, Sunshine Coast and Brisbane were firm favourites with interstate and overseas buyers and renters.

An extra 104,410 people called Queensland home in 2021-22 compared to the previous year, boosted by a record 55,420 interstate arrivals, government statistics show.

Ray White chief economist Nerida Conisbee said buyers who held out, expecting the market to crash, were now making their move in fear of missing that elusive window of snagging a bargain.

14 Admiralty Dr, Surfers Paradise sold for an undisclosed price

“The best time to buy is at the low of the market. Last year, we saw a lot of buyers watching and waiting for the housing market to crash, or for prices to come down substantially,” Ms Conisbee said.

“Instead of a crash, we have seen some decent performance this year and it is likely that this is going to continue to drive more buyers into the market.”

PropTrack’s home price index for Gold Coast houses and units combined was up 4 per cent over the year to June, and 2.4 per cent since March, to a median of $840,000.

Agents say the prestige market is still firing, buoyed by well-heeled buyers not constrained by a mortgage belt.

Ray White chief economist Nerida Conisbee

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But a homebuyer on a typical Aussie income simply can’t borrow as much as they could in 2021, and consequently vendors must accept less if they are serious about putting out the ‘sold’ sign.

The RBA this month hit pause for just the second time since May 2022, keeping the cash rate at 4.1 per cent.

Buyers’ agent Oliver Dunstan, of Rose and Jones, said the so-called mortgage cliff still loomed when fixed-rate loans expired, leaving families open to impossible hikes in their monthly repayments.

Buyers’ agent Oliver Dunstan, of Rose and Jones

First-home buyers, and others who purchased within the last 12-18 months, were most at risk.

“I think there’s still pain to come from some murky waters in the macroeconomic world,” Mr Dunstan said.

“I haven’t seen many distressed sales but we do expect there will be people in the next 6 to 12 months who have to divest their assets and buy lower-cost properties.”

But Ms Conisbee said even a wave of forced sales may not stop the tide of capital growth rolling in, with national home values recording their biggest increase last quarter since the end of 2021.

“Right now, house price growth appears firmly entrenched,” she said.

“More rate rises, a rise in distressed listings and even recession may not be enough to lead a decline in prices.”

Prestige property is still in demand

Originally published as Why FOMO is making a return to the market