Winter is here, and it’s brought more than just a cracking cold snap – it’s brought a property market that couldn’t look more different from this time last year if it tried.
Gone are the frenzied buyers gripped by FOMO, housing markets in which prices rose by $1200 a day and auctions that routinely finished millions of dollars over their reserve.
Last year’s property zeitgeist of never-ending price rises has instead been replaced by rapid-fire interest rate rises (with more forecast to come), slowing or falling prices (depending on your postcode), and a general sense of trepidation.
If you’re a buyer, do you sit on your hands and wait for prices to fall? Or do you buy now before interest rates and inflation rise even more, reducing your borrowing power and spending capacity?
If you’re a seller, do you list now and meet the market before prices possibly fall further? Or do you hold off, assuming there will be less for sale in a few months, meaning fewer homes to compete with?
This period of uncertainty over what to do in the market is what Domain Home Loans mortgage broker Millind Garg calls the “transition phase”. Both buyers and sellers need a bit of time to catch up, he says.
“It takes about three to six months; people just want to sit on the fence in anticipation and get some clarity on what’s actually going to happen with rates and property prices,” says Garg.
“It’s the shock. As soon as people start to live with it, like COVID, they get used to it. They do their budget; they adjust.”
That hesitancy in the market, or transition phase, is being reflected in property data.
Analysis from Domain shows that the number of property searches fell substantially in April compared to the same time last year in every state except the Northern Territory. NSW, Victoria and the ACT recorded the most significant falls. Search volumes are down overall across Australia by 38 per cent.
The number of current property listings increased in every capital city bar Canberra during May, data from Domain shows. Compared to a year ago, Adelaide, Perth and Brisbane – all markets that are holding up better this year – have fewer listings.
Domain chief of research and economics, Dr Nicola Powell, says even though current listings are up, not up by huge amounts, the fact they are increasing at all is an indication that the market has changed.
“One of the fundamentals in a change of market is where the current stock is sitting. A turn in the market is evident when you see that total supply build. Homes are coming onto the market quicker than they are purchased,” she says.