The April property market was very busy with buyer numbers throughout the Inner West peaking yet again. We are seeing a strong transition of buyers traversing the markets of the North Shore and Eastern Suburbs as they search for reasonable value, which our local market apparently still comparatively provides.

 

Running off the back of frenzied activity from first-home buyers last year, it is now upgraders who are pushing demand and very strong sale results. Looking back at the Federal Government’s stimulus plan and First Home Owner’s Boost scheme, you would have to say that it was highly effective in bringing the economy out of a crisis of confidence. Now the Reserve Bank of Australia (RBA) is working to pour some cold water over consumer sentiment by consistently lifting interest rates.

 

Consumer confidence has been at remarkably strong levels in recent months, however interest rate rises are likely to weigh on this positivity as household interest repayments escalate. While the RBA may not have a direct policy lever marked ‘confidence', historically when changes in monetary policy occur and rates increase there is a direct link to confidence cooling as well as spending behaviour tightening.

 

Mortgage lending declined again in February but in the same breath the supply of property remains tight which is presently maintaining demand. Most of the property indicators suggest the present market intensity should cool at some stage this year yet we continue to record significant foot traffic at opens, aggressive offers and reasonably quick transactions. And, with less property becoming available during winter it’s likely that buyer demand will remain constant for some time yet. 

 

The variable remains around that word ‘confidence’ and be in no doubt, much of the rhetoric from the RBA is well structured to deliver a message without officially changing monetary policy. We don’t think anyone involved in property is under any illusion other than to assume rates are only heading north. It is apparent that rate increases to date have been absorbed by buyers in our market and confidence remains strong, but is there a point when this will shift? And, given that upgraders are driving the market and we have a limited supply of suitable homes for this demographic, is it a case that demand will always be there? An interesting conundrum and it’s apparent that what’s playing in front of us today is a competitive buyer market that simply keeps surprising.