The property market has weakened since last autumn’s boom, however now with plenty of competition around for the most outstanding homes, agents say it has turned into a more normal market.
So what is a normal market?
Steady auction clearance rates around the 60 per cent mark are one indicator. Healthy levels of homes for sale are another factor, alongside having a clear run of weeks to open a home for inspection without the interruption of lockdowns.
Another indicator is when there is one buyer for every seller, so the market is evenly matched – even if homes pass in on the auction floor and take longer to sell than in the days when a dozen bidders turned up on a Saturday morning and fought it out.
The largest capital cities have already entered a normal market, although some regional areas and smaller cities such as Brisbane and Adelaide are not there yet. Home buyers’ borrowing capacity was decreasing as interest rates began to rise, meaning hopeful sellers might need to meet buyers in the middle.
You’ve got buyers who’d like to buy and sellers who want to sell, but what we had before was buyers who wanted to buy and hardly anybody who wanted to sell. A normal real estate market is where a buyer and seller get a chance to negotiate a position, whereas the market we’ve had, only the seller had a chance.
Both Sydney and Melbourne auction clearance rates have hovered around the 60 per cent mark in May. Analysts correlate a 70 per cent auction clearance rate with annual property price growth of about 10 per cent but consider 60 per cent a balanced market.
People potentially may be re-rated with their buying power as the interest rates continue to rise. They might have a loan application for $1 million today, then in a different time that $1 million becomes $900,000.
He said the Sydney and Melbourne property markets have come back, but there were still slightly more buyers than sellers now, although a clearer picture could emerge through winter.
Sellers need to know that if the interest rates continue to go up, their buyers jjust won’t have the same buying power.
From a vendor’s perspective, you’ve got to be attractive in the marketplace.
From a buyer’s point of view, I’ve seen plenty of auctions this year where there’s still been good levels of competition and strong prices being achieved, typically better properties that don’t have significant compromises. You still need to expect to have to compete for that
