Buyers are adjusting their budgets
- Written by Tim McKibbin
The Reserve Bank’s predictable but unhelpful decision last week compounds the strain being experienced by mortgage holders and renters.
It forces the cost of housing higher which builds the inflationary pressure and counters the impact raising rates is supposed to have.
CoreLogic figures show house values in Sydney rose 0.8% in October and 2.5% for the quarter. It also encourages the status quo in the real estate market. The severe shortage of homes means rate rises are not having the dampening effect on prices they typically would in a balanced market.
Buyers are adjusting their budgets accordingly and while there is still plenty of cause for optimism among vendors, they need to work closely with their agents to come up with the right price expectation and strategy. Transactions will continue to tick along if price settings are appropriate and for people wanting to sell before Christmas, there is still time. The uncertain outlook for interest rates in 2024 may entice more people to consider this option.
Recent auction volumes demonstrate vendor confidence and the continuation of strong clearance rates suggest this confidence is well-founded. Downsizers in particular may view the current environment as the right time to make a move to something more affordable. If they can find something suitable, that is.
Government’s recognition of the supply crisis has triggered the rezoning of 68 hectares in Macquarie Park to residential with the hope it will accommodate an extra 3,000 homes. However, it will be a meaningless move until conditions for developers become feasible, and this side of the equation remains unchanged.
With various levels of taxation accounting for about 40% of the cost of new housing, reform in this area represents one of the clearest opportunities for Government to address the feasibility of new housing development. It’s time to move beyond grandiose announcements and focus on actions with the potential to make a difference.
