Market remains stable as cash rate peak nears.

July was another topsy turvy month for property, with an equal number of sellers feeling that they obtained an outcome above expectation as those who felt buyer interest fell disappointingly short. It’s an interesting market dynamic as online enquiries and foot traffic through inspections are generally positive, however the depth of the buyer pool for any particular property is thin. If a seller misses the opportunity to secure the one or two key interested buyers, there is a noticeable drop away in interest among the next rung of buyers. The auction market also reflects the tricky environment, with SQM Research noting that the weekly clearance rate for the month lies in the band of 52% to 56%. Additionally, of all the properties scheduled to be auctioned weekly, only 25%-30% actually sell ‘under the hammer’, which reflects that heated competition is not broadly evident for the vast majority of listed homes. Sydney values have now risen by 6.1% this year, according to CoreLogic, however, the speed of the price increases has been moderating. Listing levels are reasonable but remain below the long-term average, while investment properties made up a record 40% of listed stock in Sydney through June. This could come down to a range of factors such as the higher interest rate environment, restrictive rental policy, higher land taxes and talk of capping rents or the boomer market looking to take cash off the table. The data is somewhat skewed as the overall volume of listed property is lower while investment sales have risen slightly, so the percentage of investment properties is now higher. That said, higher rates and borrowers falling off the proverbial mortgage cliff are playing a part in who is making a move through this Winter period. In some welcome news, inflation is falling and came through lower than expected at 6% in July. The RBA will be pleased to see this outcome but with unemployment remaining at a record low and the US Federal Reserve lifting rates higher, the RBA still has some work to do navigating Australia through this rocky period. Futures markets are now betting on a lower terminal cash rate of 4.3% so we may be very close to the peak in this lifting cycle. This will be good news for the property sector and may reinforce confidence as we edge closer to Spring. Most banks are forecasting price growth for the remainder of 2023, however experience suggests that just when you think property is going in one direction, something can come from leftfield and change everything. For now we’re working our way through a well-poised market that requires sellers to be responsive to buyer feedback while buyers can’t sit on their hands as properties are trading within 25 days of being listed.