What’s the market doing…

Over the past few months we have seen a shift in the market.

Date:

21-Mar-2018

Category:

Buying

Tags:

Author:

Sasha de Bilde

What’s the market doing…

Over the past few months we have seen a shift in the market.

Over the past few months we have seen a shift in the market.

The total number of properties for sale on the Northern Beaches went from around 700 to well over 1,200 (at the end of 2017) and is currently sitting around the 900 mark.

Auction clearance rates went from around 80% to around 55% (at the end of 2017) and are currently sitting around 60%.

Sale prices have definitely been effected, as well as the number of buyers actually looking for homes, which is indicative of the type of market we seem to be heading towards.

One of the big questions we get asked (a lot) is “what do we think the market is going to do?”

Personally, I think the market has had the shift it needed. It could not continue to grow as it has done for the past 5 years as it would not only become unaffordable, it could also put as a greater risk if there were any uncertain times ahead both in our national and global economies.

One of the things that has changed in recent months is banks’ lending criteria. There has been a big change to interest only loans which historically made up a large percentage of new mortgages. There has also been a shift in how much buyers are actually able to borrow (with pre-approvals only lasting 3 months now instead of 6 months and then the candidate needing to re-apply).

Over the December quarter, the Australian Prudential Regulation Authority (APRA) data shows that there was $15.272 billion worth of interest-only mortgages created. This $15.272 billion was the lowest quarterly value of interest-only loans written on record (data dates back to March 2008).

The next few months and quarters of data will be very interesting to analyse to see how borrowers and lenders adjust to the ever changing mortgage market and what impact this has on housing market activity and the pace of capital gains.

Then there is also the looming threat of interest rates starting to go back up. This is something that could pose a big problem to a lot of home owners who are already highly geared and cannot afford an increase in their payments. Whilst we certainly have no idea what will happen in the finance world, a lot of economists are predicting that the second half of this year (and the start of 2019) could see multiple rate rises. How this will effect the market remains to be seen, but it would indicate that we probably won’t be seeing a lot of growth in the near future.

Our advice:

So long as you buy and sell in the same market, then it’s all relative. If however getting the best possible price is the most important thing, then our advice is to sell sooner rather than later as there are a few indicators that suggest the market will slow a little more in the coming months. Though again, this remains to be seen.

If you would like a buy and sell assessment so you know the costs you would be up for if you look at making a move, please let us know.

If you would like to speak to any mortgage brokers or financial planners, we have a number in the area that we could recommend.

Anything else we can assist with (from a real estate point of view), please feel free to get in touch!