Market jitters as RBA kicks the can down the road with rate cuts

Following the disrupted month of April which encompassed a number of holidays, it was expected that normal transmission would resume in May and the market would improve as a result. What we did see unfold was a nervy RBA board meeting in which they came close to lifting the cash rate. This decision has spooked a segment of the buyer pool which was starting to build confidence that rates would be cut as early as August. However, it appears that the rug has been pulled and it’s now looking increasingly likely that there will be no cut to the cash rate in 2024.

Despite the economic uncertainty, transactions continued to push through, although many were hard-fought negotiations between buyers and sellers. The auction clearance rate continued to reflect weaker buyer confidence, with an average of just 30% of listed weekly auctions actually selling ‘under the hammer’. This generally reflects that the depth of the buyer pool is somewhat compromised, but for those sellers still lucky enough to secure the passionate purchaser, the end sale price was still reflective of a very bullish outcome. These stronger price achievements, even if secured prior to auction, are enough to keep buyers engaged in the market and despite concerns about the cash rate, buyers are seeing enough transactions to feel some sense of confidence and reliability in their chosen market.

We had a number of standout transactions during the month, covering a vast range of areas including, Lane Cove, Ryde, Gladesville, Five Dock, Drummoyne, Russell Lea, Annandale, Balmain, Birchgrove, Petersham, Marrickville, Earlwood and Rozelle. We met more than 9,000 buyers in 30 days, we landed an 84% clearance rate and our average days on market was 24. Interestingly, Domain and REA data reflected a sharp increase in new listings from the beginning of April of more than 35% in Sydney. More listings are part of the reason behind a slightly diluted buyer pool but also suggest we could have a busier Winter trading period.

Overall, we’d suggest current buying conditions are close to A+ with decent options available, less buyer competition and highly engaged sellers who are open to flexible terms. As we know, such an environment never lasts that long in Sydney, so it’s up to buyers to recognise these conditions and take advantage while the going is good. That said, we can certainly see the higher rate environment is playing a key role in this market, so as we edge into Winter, all eyes will be firmly focused on the rhetoric and data coming from the RBA. If inflation data is better than forecast and the RBA grows in confidence to cut rates, the property market will energise quite quickly. If inflation remains sticky, buyers will no doubt respond accordingly.