MONTHLY MARKET WRAP: MAY 2019

 

Record low stock levels define the market

 

May proved to be yet another interesting month for the property market with the major factor being the lack of property available for buyers. Many had hoped that after the extended Easter/Anzac Day holiday period that a steady stream of new properties would be listed for sale but it never eventuated. In fact, stock levels in Sydney are now tracking at the lowest level in more than two decades. Perhaps the Federal election held back some would-be sellers, along with the softening market, which seemingly has many passively observing conditions rather than taking the leap into the choppy waters of the current conditions. As a result, we saw reasonably balanced trading with an ongoing focus on finding good value for buyers and continued demand for quality high-end real estate.

Of course, we have to mention the Federal election and the surprising win for the Liberals. Whatever side of politics you fall on this campaign garnered a lot of attention, particularly around the property sector, with Labor promising to reduce the capital gains benefit and remove negative gearing. There was no shortage of articles on the impact these changes would have on property, both pro and con. Many market commentators suggested that if Labor did win there would be a six-month surge of investors looking to purchase before the changes came into effect in January 2020. With a Liberal win, Head of Investment Strategy and Chief Economist at AMP, Shane Oliver, commented that a new First Home Buyer Scheme (promised by both Liberal and Labor), RBA rate cuts and a slowing in the new supply of property will likely help Australian residential prices bottom out short of the worst case falls many had suggested. He went on to say that it’s business as usual, which may see the stock market have a short-term bounce with no adjustment to franking credits. Interestingly, the average three-month share market increase following an election since 1983 is 4.8%.

Turning back to our local market, we are predicting listing levels to remain low throughout winter, which has been the case over the past several years. We wouldn’t be surprised if this year’s winter market ended up being one of the leanest on record given that prices and trading conditions continue to offer up some challenges. However, the election is behind us and with no fiscal changes to property, there will be a sustained period of managing the existing climate, which anyone looking to buy or sell appears to be adjusting to already. Correctly price positioning any property right now is crucial to a sale and we can’t see that changing for a long time. We’ll now be looking to home loan approval rates, which are a future barometer for property activity, and as at May, they are still reducing. The Liberals talk about effectively managing the economy and the pressure is now on to deliver on that promise. 

 

May’s Signature Performers

 

Posted in Uncategorized on 3rd June, 2019