The heat is on!

You don’t have to be in the real estate industry to know that the market is booming.

But why?

In February, the national average home price experienced its biggest month-on-month rise in seventeen years. Values rose across a diverse range of dwellings, both in cities and regional areas.

The unique nature of this ‘boom’ is what has made analysts and commentators curious. The interesting part is that the last time we saw such a broad-based rise was post-GFC when the economic stimulus that was meted out fuelled buyer demand.

Despite the coronavirus pandemic having a detrimental impact on many household incomes, interest rates have remained at a record low, and economic conditions have improved. These factors, accompanied by government stimulus and a shortage of supply, have combined to create upward pressure on prices.

As expected, Sydney and Melbourne have been the strongest performing areas. But the question is whether this trend is sustainable. Housing values are on track to reach record highs and it is doubtful that affordability will keep pace.

Wage growth has lagged and the government has flagged withdrawal of the financial assistance provided since the onset of the pandemic. Having said that, government assistance has been incrementally withdrawn since September and house prices have continued to rise in that time. The consensus, therefore, is that it will be lower income earners that will be hardest hit creating a greater divide between the haves and have nots.

Homebuyers are being forced, and dare I say encouraged, to borrow as much as they can to meet the demands of this moving market. Lifestyles are being sacrificed for the honor of homeownership, which over the years has become a privilege in Sydney rather than a right.

The slightest increase in interest rates – which the RBA has said is unlikely until 2023/2024 – can result in hardship and mortgage stress for many households. As I have mentioned in a recent blog, whilst the RBA has indicated that they will keep the cash rate stable for the next few years, APRA could very well step in to once again regulate lending criteria in an effort to take the heat out of the market.

If you are thinking of selling, now is one of the best times to start the conversation and planning. Our market conditions are unique right now and perfect to take advantage of.

We achieve our strongest results by following a proven strategy, tailor-made to your situation. Take the opportunity to gain from this advantage and my expertise and contact me now.

If, however, you or anyone you know would just like to discuss the current value of your home and the best strategy to get you the best price when you come to sell, you can contact me any time.

Below are a few properties we are currently marketing for sale.

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Published August 24, 2021

By Belinda Cassano