Records are tumbling!

Interest rates on the rise. Cost of living soaring. Affordability diminishing.

And yet real estate records are being broken!

On Saturday we auctioned a one-bedroom apartment in Balmain.

22/100 Reynolds Street Balmain

Interest was solid but at the end of the day it was down to two parties competing for the ultimate prize, paying $1,510,000 for the pleasure. Granted this apartment is large, but it also comes an enviable second in all-time sales of one-bed apartments on the entire peninsula, essentially making it the highest priced sale for a non-waterfront one-bedroom apartment. Second only to 1/47 Wharf Road Birchgrove - a waterfront block boasting uninterrupted water views that sold last year for $1,532,000 - and significantly ahead of the next highest sale of $1,430,000.

Interestingly, in an environment where severe headwinds prevail, the housing market upswing has become more widespread, with four in five house and unit markets analysed nationally recording a rise in values over the past three months. While the rate of growth in Sydney has eased, the market grew by 2.5% in that time.

Increasing costs have prompted mortgage holders to approach lenders to discuss refinancing options. Although property prices have been rising, and theoretically equity has kept pace, in reality the ability to service some existing loans has deteriorated. With lenders factoring a 3% buffer on top of the current interest rate when assessing a loan request, a lot of borrowers are finding that they are no longer eligible for the loan amount they qualified for when interest rates were a lot lower, leaving them essentially trapped in their current agreements.

We are hearing of a two-tier market and the gap between what’s affordable and what isn’t is widening.

And why would this be?

Buyers in the upper range tend to be less reliant on borrowing funds and the increasingly restrictive limitations on first home buyers to secure a property has this cohort now purchasing property on their behalf.

Which was exactly the situation at our auction on Saturday; parents helping their kids out. The question remains though. Will this help this and future generations or make it harder?