Hey Day or Mayday?

The Sydney property market has had all the challenges thrown at it over the past few years and it has risen to the occasion each time.

But is it indestructible?

In 2020 the world was hit with a pandemic. At that time - being unprecedented and all – no one knew exactly what would happen to the property market. One thing is for sure though. No-one thought it would go any way but down.

Within months prices defiantly started to surge as stock dried up; until the first interest rate increase in May 2022. As quick as prices had gone up, they dropped. Prophets again predicted a downward spiral in home values but here we are in October 2023, after twelve rate increases, and we are all but back to pandemic boom prices.

Why is this happening?

Basically, demand is outstripping supply. The return of immigration saw an influx of those seeking housing. While it is understood that the government is not keeping up the supply, we also have homeowners reluctant to transact. Increased mortgage costs and the cost of living have put a strain on the average Australian’s hip pocket. Most were able to build up some savings during the pandemic and I believe the erosion of this buffer over the past year has masked, or deferred, homeowners’ need to sell as they fall short in their ability to service their mortgage.

Spring has brought with it an increase in property listings which has eased the strain on the supply side and, in turn, price growth. This has also meant that buyers have had less of a sense of urgency and superior quality stock has fared better than the inferior, run of the mill offerings.

It is becoming increasingly reported that the RBA will put the cash rate up again at next month’s board meeting. We know that this will only put more stress on mortgage holders and that those nearing their capacity to make their repayments may well reach their threshold and have no option to sell.

A word of caution!

Everyone wants to get top dollar for their home, particularly in times of financial burden. When interviewing agents, be careful to not be lured by the promise of a price that can’t be substantiated. Although there is good demand, buyers are being a lot more measured in their approach to borrowing and buying. If the RBA decides to apply a further incremental change to the cash rate next month, this cautiousness will become a more dominant feature of their decision making process.

We are approaching that time of the year where time is expiring to complete a deal by Christmas – but there is time. We know it’s a good time to sell now and that may change next year as financial pressures take hold, So, if you are considering selling, let’s talk now.