The weekend following the Federal Budget has given the property sector a complex landscape to work through. As the market manages a path forward, we are navigating a series of macroeconomic shifts that don't exactly scream positivity. Far from underpinning property market confidence, the budget has essentially cemented a path of easing across almost all price sectors.
Across our open homes on the weekend, we met an average of 9 buyers per property. While the volume shows the market is certainly not dead, dissecting the individual parties' ability to act, and their overall mood, reveals a distinctly subdued environment.
As framed in yesterday’s Australian Financial Review, buyers looking to engage right now are deeply concerned about "catching a falling knife." As a result, while buyers are engaged to make an offer, many offers are coming in 10% to 15% below where an owner may expect to trade.
The friction in data: Auction clearance rates
Our experience suggests that buyers always front-load tomorrow’s worries into today’s decisions. In real estate, however, perception quickly becomes market reality.
This psychological shift is exactly why the auction market is feeling intense pressure. We have seen clearance rates hammered not just to the onset of COVID-19 levels but sustained at this sub-40% level for eight consecutive weeks. In the modern era of data capture, this prolonged low is entirely unheralded.
We are watching ‘The Great Pause’ unfold in real-time:
- Buyers are determined to hold their positions and mitigate risk.
- Sellers are bullishly holding onto historical pricing levels.
Transactions are still occurring, but exclusively for those who can find the balanced meeting point in negotiations. Everyone else is currently reassessing their financial plans.
