Welcome to our Summer newsletter.
With widespread lockdowns hopefully a thing of the past, our international borders starting to open up and life starting to get back to how it was prior to the pandemic, we’re all looking forward to spending time with our family and friends as we edge a bit closer to the holiday season.
National Real Estate news
‘COVID-19 has had a number of undeniable impacts on property markets – strong price growth, strong demand for big homes, a desire to move to regional areas, relatively weak rental markets and greater interest in holiday homes. Luxury property has also been far more highly in demand because of the pandemic.
As both the Sydney and Melbourne economies open up again we are seeing an increase in the number of properties for sale. Scheduled auctions across our group are currently double where they were 12 months ago, while the number of listing authorities is up almost 12 per cent from last year. This is great news for anyone looking to buy, and as we know, most sellers are subsequent buyers; so this is good news for many sellers as well. While the red hot property market has been great news for pricing, it has been a difficult market to buy in.
An indication that the property market is starting to slow down is that days on market are starting to increase. The number of days a property stayed on market hit a record low in March 2021 with homes selling on average in 21 days. In September, this rose to 35 days.
As to what is driving the slow down, it could be a number of factors. The first is that buyers are becoming more discerning, perhaps driven by very fast price growth and a subsequent hesitancy. The second could be lockdowns. It can be difficult to sell homes in lockdown. Not only do listings drop but so too does buyer activity – as a result homes take longer to sell, without necessarily impacting pricing. For now, price growth is continuing at a rapid rate but this is one indicator that suggests that it may start to slow as we head to the end of the year’. (Nerida Conisbee- Chief Economist Ray White)
Local Real Estate news
Like the rest of Australia’s property market, strong price growth, strong demand for big homes, and a desire to move to regional areas have fuelled the Blue Mountains property market throughout the pandemic. Buoyed by low interest rates, high savings rates and of course high levels of tree change migration from Sydney to the Blue Mountains.
In 2021 there were 45 property sales over $1 million dollars in the Upper Blue Mountains (Medlow Bath, Blackheath, Mt Victoria) compared with only 7 sales over $1 million dollars in 2019.
The question is, is this price growth sustainable? ‘Price declines are generally driven by factors that can’t be controlled easily (e.g. iron ore price falls) or shouldn’t necessarily be controlled because of house price falls (e.g. interest rate increases). Restricting finance can more easily be controlled and if it does lead to a drastic change in sentiment or pricing, can be more easily pulled back.
Of the above factors, interest rate increases are looking unlikely for some time. Similarly, with borders reopening and economic growth expected to accelerate again post lockdowns, both a rise in unemployment and population decline also seem unlikely to occur. Iron ore price falls could be problematic however the impacts are likely to be contained to Perth specifically.
Right now, it is looking like restrictions to finance will be the mechanism to slow down lending growth, and by extension strong price growth. The first set of restrictions came in on 1 November and is fundamentally a stress test for potential borrowers to ensure they can withstand a rise in interest rates. This controlled slowing of the housing market means that for now, a significant dip in house prices across Australia is highly unlikely. What we have to look forward to is a more stable market which is good news for both buyers and sellers’. (Nerida Conisbee- Chief Economist Ray White)
It is a great time to sell. This is the best market that we have experienced in many years. What are you waiting for? Call the team at Ray White to discuss your property on 4787 8797.
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