Despite the mixed headlines in the media, the new year appears to be bringing back some degree of buyer confidence.
Early in January each year, there is normally a surge in homebuyers who are interested in what’s happening in the property market and this year has been no exception. On the ground, we’ve seen firsthand that buyer interest has been very high with many open homes seeing huge numbers over the past few weekends. We’ve seen as many as 50 groups going through some of the quality properties which is a good sign that there is still plenty of interest at the moment.
However, we also realise that this is typical of this time of year when people are on holiday and they’ve spent the past few weeks sitting around and pondering what they want in their lives.
In terms of where the market is at, in reality very little has actually changed over the last six months. The key event last year that changed sentiment and prices was when the RBA started to hike interest rates in May. In the months that followed prices took a nose dive, but since that point not much has really changed.
Since June or July, we started to see some common themes playing out across the market and they are still holding true today.
For the most part, sellers have now realised that the market has changed and the high prices that were on offer in 2021 are no longer available. There are still properties sitting on the market and not selling and that’s mostly because those remaining few sellers haven’t come to accept that the market has changed.
On the flip side, there are properties that are selling and achieving good prices and, in some instances, higher prices than in 2021. These are normally the high-quality, A-grade properties in blue chip areas. As has been the case for the past few years really (and perhaps forever) the best properties sell and sell well in any market.
The other thing that we are all wondering about in 2023, is what is going to happen with the fixed rate cliff that is set to hit this year. There are potentially thousands of homebuyers who purchased properties at low 2.5 per cent fixed internist rates that are due to roll off in 2023 and land on something around 6 per cent. This is likely to add thousands to mortgage repayments for these people who bought during the peak of boom.
While we’ve seen the stats that tell us around 50 per cent of buyers through that period had been on fixed-rate loans, we don’t know what segment of the market the majority of these borrowers were focused on.
I suspect that rising interest rates will impact these borrowers and there will be forced sales as a result. However, it is likely to be the minority, not the majority.
For the time being, I suspect the status quo will continue until something changes from the RBA. When they eventually pause their rate hikes that could bring more buyers back into the market and as we’ve seen in January so far, there is still plenty of interest in real estate even in the current market.
If you are interested in the above, feel free to reach out to a Henderson buyers agent today for more information.