The Market Feels the Pinch
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Interest rates rise again
Major banks have already adjusted their property price forecasts for 2022-23 after July’s interest rate rise, the third of an expected tranche of Reserve Bank hikes this year.
CBA predicts a 6% decrease in home prices across Australia over the rest of this year, with 15% falls in 2023. ANZ sees 5% falls over the rest of the year and a 10% drop in 2023. NAB predicts a 2.25% decrease in 2022, before a further 15% correction next year.
Why are we so worried?
Doom and gloom is the prevailing mood in the international economy as the world struggles out of the COVID-19 pandemic and into geopolitical turmoil sparked by Russia’s war on Ukraine and mounting concerns over China’s ambitions in the Indo-Pacific region.
Global supply chains have been disrupted by the war and China’s ongoing Covid Zero policy, with the cost of everything from timber to petrol continuing to climb.
Stock markets are fluctuating wildly as investors become more risk averse.
Buyers have more choice
Buyers are enjoying more choice during a busier-than-usual winter, after the strongest annual increase in the total number of homes for sale in more than a decade.
PropTrack economist Angus Moore said the increased choice sets up buyers to get a head start on the spring selling season, traditionally the seasonal peak period for housing market activity.
“The stronger-than-typical winter we’ve had so far is giving buyers more to choose from, particularly compared to last year,” Mr Moore said.
With homes taking longer to sell, the latest PropTrack Listings Report showed the overall number of properties advertised for sale on realestate.com.au rose by 4.9% in July compared to a year earlier – the largest year-on-year increase since 2010.
“That’s good news for buyers, particularly after a very competitive past couple of years, and the extra choice will let many get a head start on the typically busier spring selling season,” Mr. Moore said.
Stock increases meant improved options for some city buyers
Despite fewer new listings in the month, the total stock of properties listed for sale increased slightly, up 0.6%, as properties took longer to sell. While only a small increase, it is unusual as we typically see stock on market decline in mid-winter amid the quieter activity.
Compared to last July, the total stock of properties listed for sale increased 4.9%, which is the largest year-on-year increase since 2010.
While that is in part due to the seasonally unusual increase in stock available for sale this year, it is also partly driven by the fact that options were limited in July 2021, with a number of capital cities in lockdown.
Similarly, Sydney recorded its largest ever year-on-year increase in total stock available, with total listings up 30.7% this year compared to the lockdown-affected levels in July 2021.