Buyer sentiment shifts again as more cash rate increases loom
- November 1, 2023
We’re in the midst of a most unusual property market, continuing to navigate through the financial hangover following the irresponsible fiscal policy during the pandemic. Since 2020 the property market has been a rollercoaster ride, rising to record-breaking levels before tracking south and posting a year of losses in 2022. Prices have steadily climbed again this year and are now back nearing the dizzying heights of the pandemic records, however this time we have inflation running hot and a cash rate that’s jumped more than 400%. Such a scenario has not occurred since the early 1900s, which, for the modern day property expert, means we are in a market that no-one really has much experience working through and little reliable advice about what may unfold next.
Buyers and sellers are attempting to navigate a path to success through constant fluctuation, with dips, peaks and everything in between. We are also continuing to see buyers respond very differently to the quality of listed properties, and what may draw in aggressive buyer interest versus a more passive reaction may only be fully known once the property hits the market. Over the past month or more, the auction clearance rate has pinballed, with preliminary results in the 60-70% bracket yet a final clearance rate much closer to 50%. This outcome reflects a true arm wrestle unfolding in the suburbs, with buyers seeking value and sellers looking to ensure they hit an acceptable number.
It’s also been a fairly slow Spring market, until the last stages of October when listing volumes ticked up another 20% locally. All of a sudden buyers were saying that they had a few property options to make a move on – a comment we hadn’t heard with any great consistency this year. That said, with market conditions evenly poised and the likelihood of another cash rate increase in November, we’re not certain the market can sustain a late increase in volume. This has the real potential to place downward pressure on properties that may be a touch compromised and struggle to attract competitive buyer interest.
It’s also a little surprising that more sellers and certainly sales agents are not aligned with the current market dynamic. There is a lot going down globally right now and closer to home the economy is struggling to get inflation under control. This is a market for sensible decisions. Sellers should adapt swiftly to buyer feedback and buyers will need to remain alert to improving value as we move into the final selling stage of the year. Importantly, the age-old foundations of selling remain in place, with an accurately priced property set to sell within a four-week cycle, however as the market shifts, it’s important to be clear on the realistic value and then base your selling strategy on that target.
