More new listings are starting to hit the market as the Winter season comes to a close and sellers get ready for the Spring selling season.
This Spring will be an important test for the market. Firstly, How will recent changes making lending easier impact demand and sale prices? APRA has provided some sensible relief to banking guidelines, which had been strangling borrowers and relegating them to the sidelines because they either couldn’t get finance at all or they couldn’t get enough finance to fund their next move.
Secondly, will all those buyers who held back in 2018 and 2019 try again, leading to more competition? It looks like it, with data from the Australian Bureau of Statistics for June showing a rise in new lending for owner occupied and investment properties for the first time in more than a year.
Thirdly, will the two rate cuts (so far) motivate people to re-engage this Spring, when more homes are available to choose from? I think the market has settled at its new level and buyers are happily back in buying mode.
The unexpected result in the Federal election sounded the bell for market stabilisation. Buyers feel the bottom has been reached and they aren’t at risk of prices going down further after they buy. Equally, sellers can enter the market with greater confidence that there will be genuine interest, if not competition for their property.
As we head towards Spring, we are seeing higher buyer interest, but available listings remain low for now. As we see some of that volume return going forward, it appears likely that buyer levels are sufficiently deep to cover any reasonable increase in listings.
With a low interest rate environment remaining indefinitely, I believe that many first home buyers and upgraders will be keen to transact.
The highest demand will be for the highest quality. Areas, suburbs, streets and properties that represent the better offerings of a neighbourhood will be in greatest demand this Spring.
Securing these types of homes will cost a bit more but longer-term growth suggests that a higher initial investment will be well and truly rewarded with stronger capital appreciation.
So, buy quality and focus on location and aspect this Spring.