The market is starting to show signs of stability albeit still far from a full recovery, and the recent interest rate cut will add to the positive sentiment. The significant turnaround in buyer confidence is evidenced in the latest national auction clearance rate of 63.7%, which is up from 55.5% during the same period last year. The time may be right for potential buyers to cautiously make their way back to the property market.
In fact, interest in purchasing property is likely to be stronger now than at any other time over the previous 12 months, as we see a slowdown in the decline of national dwelling prices. The 0.4% drop over May is the lowest month on month drop since early 2018, and as home values start to plateau, we should expect a return of buyer confidence. It would not be surprising for home values to start to increase towards the end of this year.
There are still some regions experiencing declines in property values greater than the national average, however, the impact of the drop in interest rates coupled with more positive media could see values in these areas begin to level out. Potential buyers who have been reluctant to buy over the past year may now be re-assessing both the market and their own financial position in order to make a decision, as now may not be a time to linger but to act.
It is clear that the market will not get close to the extreme lows in property values predicted by the so called ‘property experts’. There is also little doubt that potential buyers held back on purchasing their home or investment due to an expectation of values dropping by the predicted 40% to 50%. This and the long period of negative media towards the property industry contributed to reduced buyer demand and the resultant drop in property values.
The industry may want to consider collating the predictions of property experts to make them accountable or expose those with alternate reasons for their wild predictions to ensure nobody benefits from the hysteria this creates.
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