If you’re planning to put your home on the market this coming spring, recent events in the property market may have caused you to pause and re-evaluate.
And that’s understandable. But the positive news is that the leading real estate researcher, CoreLogic, suggests our transition from a booming market to more normal behaviour will be “orderly”.
CoreLogic’s latest figures say there were 19% fewer settlements in the three months to May, compared with the corresponding period in 2020. The Australian Bureau of Statistics numbers on new mortgage commitments align with this performance.
While we can see that the buyer exuberance of 12 months ago has left the market, that doesn’t mean prices are not holding up well.
Sellers are retaining much of the benefit of the 35% value growth created over the past two years.
A CoreLogic survey of 106,000 sales in the March quarter showed 93.7% of properties sold for a profit. This was down from 94% in the December quarter, before the Reserve Bank began increasing rates. So, this key indicator has hardly moved.
The average gain on a property sale for both houses and units, in the first three months of the year, was $290,000. The median average loss was just $33,000.
No one is suggesting inflationary pressures and higher rates are not dampening the mood. However, if you check the price performance of your area and talk to a trusted agent, you’ll make a properly informed decision on whether to sell or stay.
These are our market observations, based on our experience.
Second-guess danger
Trying to pick the right time to buy and sell is fraught with danger and frustration. We believe you should make your move when you’re ready. You can wring your hands about whether you could get a higher price or buy more cheaply, but in the long term it evens out. So, find the property you love and move forward.
Many markets
A lot of commentary is broad-brush by necessity. However, Australia isn’t one big market but thousands of micro ones. Talk to one of our agents to find out what’s happening in your area and put aside the sweeping statements.
Expert opinion
Economists believe the cash rate will continue to rise periodically until sometime in 2023, depending on the nation’s inflation numbers. The common theory is that the cash rate will peak at 3.5%.
Taking the hit
CoreLogic suggests the Reserve Bank’s first two increases in its target cash rate to 0.85% have hiked the monthly cost of a 30-year, $500,000 mortgage by $200. Higher rates, which currently sit at around 4.5% to 5.5%, will put finance beyond the reach of some first-home buyers.
Bolstering prices
While rate rises have a sobering effect on the market, a strong economy and tight labour market support prices. This is why CoreLogic says the transition to a more normal market will be “orderly”.
Don’t forget
Owners across Australia have experienced 30% plus gains in values over the past two years. And while it may be disappointing to see them edge back, your asset wealth has grown substantially.
NOTE: The information in this article is general in nature and provided as a general overview only. Always consult your financial advisor or accountant for advice specific to your personal circumstances.