MONTHLY MARKET WRAP: JULY 2019

 

July proved to be the strongest performing month for the property market we have seen since early 2017. Buyer confidence noticeably improved, spurred on by falling interest rates, APRA loosening the serviceability level for new mortgage approvals and a low supply of property which increased competitive tension among purchasers. This historically low level of available property was a key talking point in July and it appears the weakening economy has resulted in more people opting to rebalance their personal finances rather than trade property. This may be set to change though as the auction clearance rate has started to hit the 70% mark with consistency during the month. A favourable clearance rate has traditionally been the precursor for increasing levels of listings as potential sellers feel more comfortable that they will secure a sale at a reasonable price point. It may take some months before the improved conditions convert into more properties on the market which means October and November could potentially experience listings volume improvement.

We noted in July that a lot of unsold property which had been on the market for a number of months started to sell and some unsuccessful campaigns from earlier in the year were relisted and also traded. It has been a fascinating example of how the property market is largely influenced by sentiment, with a few good news stories in the media having converted the mindset of the buyer pool.

Whatever side of politics you fall on, the Coalition victory was the catalyst for this change in market sentiment, quickly followed by two interest rate cuts resulting in an RBA cash rate of an unprecedented level of 1%. On top of this, a final push from APRA saw the removal of the floor assessment rate of 7% when assessing new mortgages and the passing of responsibilities to the banks to set a 2.5% buffer above their lowest mortgage level. This news has been enough for buyers to re-enter the market with confidence resulting in auctions with competitive bidding and almost every property attracting offers at acceptable levels.

The question in the market right now is how stable is this market recovery or are we seeing a flash in the pan? Is this shift in the market the result of a few sugar hits and such a low volume of property propping up the conditions? Will we look back at winter 2019 as being the ideal time period for sellers? We’re not certain anyone can truly predict what the next 12 months may look like for the property market. One thing that the past 5 to 10 years has told us is that markets change quickly and this current adjustment is yet another example of just how rapidly conditions move. The true test of this market will be when property volumes do increase but with interest rates falling and borrowing power increasing, perhaps more property will be matched with increasing buyer demand. For now though, our sellers are experiencing a resurgent market and the results being achieved reflect this buoyant environment.

 

July’s Signature Performers

 

Posted in Uncategorized on 26th July, 2019