Why the Property Market is Sending Such Mixed Messages, Confusing Buyers & Sellers
Last Friday a report specifically written for the Gold Coast property market was released by The Urban Develop.
The Urban Developer report focussed on all aspects of our property market including median prices, the latest rental market information for landlords and tenants as well building approval numbers, home loan approvals and price forecasts moving forward.
I think at times the inconsistent information and the volume of articles written about the property market can be overwhelming. With this in mind, an article also released last week "Why the property market is sending such mixed messages, confusing buyers and sellers" was published by the Gold Coast Bulletin and Realestate.com.au.
Both articles are below with the first being a link to the Urban Developer Gold Coast Housing Market Insights for October. Below the link you will find two important Graphs focussing on both the Median property price changes on the Gold Coast as well as the Residential rental vacancy rates for the Gold Coast. Please see below.
The Urban Developer - Gold Coast Housing Market Insights
https://www.theurbandeveloper.com/articles/gold-coast-housing-market-insights
Please see below our feature article this week "Why the property market is sending such mixed messages, confusing both buyers and sellers".
Why the property market is sending such mixed messages, confusing buyers and sellers
Mixed messages from a two-speed property market have left confused buyers and sellers scratching their heads, as Australia enters the business end of the spring selling season.
While six consecutive interest rate rises have caused median home prices to fall nationally, some cities are faring better than others – and a few suburban pockets within those cities have either held firm or defied the overall trend completely with unexpected price gains.
Meanwhile, units are faring better than houses, the regions are outperforming cities, and investors are deciding whether it’s the perfect moment to enter a bottoming market or to sell-up to capture solid capital gains earned during the Covid boom.
Adding even more fuel to the fire, some of the gloomier commentators are figuring out if they should start to predict the inevitable market turnaround or pile on a little bit more doom and gloom.
“I think it’s probably the most confused market I’ve ever seen,” Martin North of Digital Finance Analytics told realestate.com.au.
Prices are down… but they’re also up
A few days after the most recent official cash rate rise by the Reserve Bank of Australia, and scary media reports detailing just how much more borrowers on variable rate mortgages will be paying, Sydney – the bellwether for the Australian market – marked another Saturday of sales.
Of the 768 auctions reported by realestate.com.au for Sydney and New South Wales, 215 were sold under the hammer, 176 were sold prior, 237 were withdrawn, 134 were passed in, and six were sold post auction.
The clearance rate of 52% was modest, especially when compared to the 80% or more clearance rates recorded a year ago. But was it all bad news?
A new experience for many
The blame for the current market confusion can be largely laid at the feet of the RBA, which pulled hard on the interest rate lever as inflation started to take off, despite earlier guidance that rates would probably remain at their record low levels well into 2024.
And for a whole generation of buyers and homeowners, those sharply rising interest rates have been a completely new experience.
“There are a few mixed messages out there and I think a lot of buyers have been sitting on their hands just waiting to see what happens with interest rates, because we haven't seen a rate rise cycle like this since 1994,” Pete Wargent, co-founder of national buyer’s agency BuyersBuyers, said.
“So, it's a bit of uncharted territory for a lot of younger buyers which is just keeping them a bit nervous.”
Mr North compared the uncertainty and volatility of the current property market to the stock market.
“If you look at the stock index, it goes up or down, but when you look at individual sectors or stocks there’s quite a variation of movement,” he said.
“We saw Twitter in the US moving up by 22% recently when Elon Musk said his purchase of the company was going to proceed, and that was an individual movement that was disconnected from the broader market.
“Prices are going up and down like a yo-yo – there’s a state of uncertainty and I’d say there’s uncertainty in the property market as well.”
Is it the right time to buy?
The advice for buyer’s trying to navigate the current conditions is to keep a close watch on the broader economic factors that could impact markets in the next few years.
“I think if I was buying in New South Wales, I would probably get moving,” Mr Wargent said.
“Stamp duty is being scrapped for first-time buyers in January. Sydney has been the market that has seen the biggest price correction, so that suggests it will be the first to recover.
“We’re seeing immigration levels suddenly rebounding very sharply, and that's largely a Sydney and Melbourne story."
Mr Wargent said there are signs that a major trend during Covid, of people getting out of big cities to head to the regions, is beginning to reverse.
“There’s also a little bit of a reversal happening in that people are moving out of the Bendigos and Ballarats and are coming back into the city," he said.
“So, if you combine that with the international students coming back and permanent migration ramping up, I think there's going to be a lot of demand for Sydney and Melbourne over the next few years.”
Mr North – who believes that decisions by investors, downsizers, and those forced to sell as repayments spiral is adding to the market volatility – said it was also up to buyers to do their own research before making big life-changing decisions about property.
“You’ve got to be selective and be prepared to do your own homework to find those opportunities," he said.