Cash Rate Increase by 0.5% to 0.85% as Buyer & Seller Confidence Wanes
Weekly Real Estate Market Update with Leigh Martinuzzi MPG
This week we continue to see buyer and seller confidence lower as the property market continues to flatten. Brisbane saw a further 0.3% price rise in the past week while Sydney and Melbourne dropped by -0.1%. Auction clearance rates fell again as many homeowners decide to either take offers prior to the auction or take their homes off the market for sale. Economic uncertainty with skyrocketing inflation and further cash rate hikes, with the RBA announcing a cash rate rise this week of 0.5%, is creating a great deal of caution amongst both sellers and buyers. However, don’t be alarmed. The market is softening but not dead.
I suppose rising inflation is something for us all to get a little worried over! People keep telling me that the prices of fruit and veg are going through the roof. My wife refuses to buy broccoli at $10 per kilo. And I understand the pain of filling up the tank with prices now often at or above $2 per litre. The cash rate has risen again from 0.5% to 0.85%, with banks independently allowed to pass this rate rise on in full. For the average mortgage of $500,000, this will equate to approximately $130 per month in additional repayments. The cost of living is rising. As such, people are less likely to make bigger purchasing or selling decisions in times of greater uncertainty. Does all this mean property prices are going to crash?
Unlikely! However, it doesn’t mean for those people selling to expect prices to continue to rise as they have in the last 12 to 18 months. On the Sunshine Coast this year we’ve seen prices move up by about 7% already. This is not likely to continue! Nationally, auction clearance rates were lower again in the past week at 69.4%, with 1 in 5 being cancelled or withdrawn from the market. That being the case, if vendors aren’t achieving a satisfactory price outcome, they are likely to decide not to sell. This will reduce the number of houses on the market and balance out the buyer-seller equation.
If we look at the likes of Brisbane, housing availability remains 40% below the five-year average, and this is the same in Adelaide and Perth. Even in Sydney and Melbourne, the number of homes for sale remains well below average. Yes, buyer demand may have waned, however, there is still a shortage of property supply which I think means for those selling, buyer interest should still be up. And while the total sales for May were down -19.2% from this time last year, perhaps in part due to the election, they are still 12.1% above the five-year average.
With the new government in place, putting pressure on wage increases and announcing several incentives to attract more buyers into the property market, I believe we may see things plateau once this initial period of uncertainty settles down. Some experts are suggesting we will continue to see prices rise until 2026. With building costs and shortages on the cards, many homeowners choosing to hold on to what they’ve got and a shrinking household demographics, I feel it is possible we will see a prolonged period of property shortages which means in the immediate future prices are unlikely to fall off the cliff. Time will tell.
One thing is clear, with the reduced number of hot buyers prowling the property market, I expect we will see raised competition among those selling. If you are selling right now and get a buyer willing to pay a premium price on your home, based on some recent comparable sales, you can’t afford to negotiate too heavily as many buyers right now are likely just as happy to move on and wait for the next opportunity to come up. Gone are the days of 2021 when buyers were fighting each other fist and nail to secure a property purchase.
Auction Clearance Rates (Preliminary). Week Ending 5th of June 2022
- Queensland – 69% (108/1233)
- NSW – 80% (449/1535)
- Victoria – 77% (739/1318)
- ACT – 78% (79/77)
- South Australia – 88% (84/368)
- Tasmania – N/A (0/144)
- Western Australia – 67% (3/631)
- Northern Territory – 100% (2/31)
REVIEW(s) OF THE WEEK
Professional and Helpful
“Leigh was the selling agent for an Auction I attended and won. I first met Leigh at the Auction. Leigh addressed all my questions, and after the Auction, Leigh liaised with the owner to answer and follow up, with additional questions. Leigh was professional and helpful.” – Palmwoods Buyer
Top Palmwoods agent
“We have purchased & sold a few homes off Leigh now, his local knowledge, friendless & professionalism makes him such a top agent. We can’t recommend Leigh enough!” – Woombye Buyer