Spring has sprung
The AFL Premiership Final kicks off all things Spring – including real estate sales. So how will this Spring pan out given the interest hikes and a change in buyer sentiment?
How the banks are affecting real estate this Spring season
Well, the banks’ interest rate hikes are biting and this has seen a decrease in sales. Buyers cannot get finance as easily as they could six months ago so many properties in the first home range are staying on the market longer. What took 30 days to lift from the market is extending out to in some cases 120 days. This will arguably continue till the interest rates stabilize.
Units and townhouses are taking longer to sell and have had price adjustments as well as second-home houses but we are seeing some lower-priced houses come on and get snapped up super quick. So lower priced houses still attract plenty of competition at auctions. Bottom line if the property is in demand, it is basically unaffected by the changing economy.
As for listings sellers are adjusting to the lower prices and accept, they will be on the market for longer. The adage ‘it has been on the market for a while is not reflecting the quality or even the price now but the lack of buyers.
Spring sunshine in some suburbs showers in others
There is a lot of commentary on more property that will be coming on the market but that is not over the whole of Victoria. That is much more specific to areas where there is mortgage stress because a lot of sellers are holding off. Of course, people still need to move for work or because they have bought something else but that is not the bulk of sellers.
Weather is not the same across Victoria and real estate is not the same either. No two suburbs have the same amount of stock and many neighbouring suburbs across the state report very different listing and sales results.
Many first home buyers choose a region rather than specific suburbs now. As popular suburbs become too expensive neighbouring suburbs are more attractive due to affordability. We are seeing buyers look for say, townhouses within 10k from Melbourne and clearly Brunswick is different from St Kilda. So, while both areas might record similar results, we cannot just mark it up to interest rates.
What sellers can expect this Spring
As real estate markets are cyclical, we are in a non favourable selling market. It is not really a buyers’ market either though. As money is not cheap currently many buyers are limited to what they would like to purchase. The property market follows a distribution curve and this Spring will look like this:
- renovated and in-demand properties – approximately 15% of the market doing very well;
- slower for the bulk of properties – 70% of the market and
- hard for those that are mortgage stressed – the other 15% of the market.
As most properties are average – in that they are quality but there are clear and plentiful comparisons – sellers will need to wait for their property to sell as there are fewer buyers. Spring also is a time of optimism and that good times are coming. Well, hopefully, the doom and gloom are in the rearview mirror now.