What has happened to buyer demand over the winter selling season?
We are now over halfway through the winter selling season and, despite a high-interest-rate environment, agents are reporting bustling market activity at a local level.
Earlier this season, pundits were split on whether the market would continue to build on the momentum gained earlier in the year. Some argued a cut in interest rates would put pressure on property prices. Others believed any interest rate cut would temper the intensity of the market.
As it stands, the cash rate has continued to hold steady over the cooler months, remaining unchanged at 4.35 per cent since November.
AMP chief economist Shane Oliver says the current high-interest-rate environment has slowed the winter buying and selling season.
“Interest rates haven’t gotten any better from the start of the season – if anything, it’s gotten a bit worse with interest rate cuts still some time away,” he says. “The market has cooled down this winter, so to speak, from the rush it experienced at the start of the year but it is still relatively busy for winter.”
Oliver says softening auction clearance rates across the country are indicative of a slower market.
In recent weeks, Sydney’s clearance rate has been hovering around the 65 per cent mark, while Melbourne’s has been sitting around 60 per cent, Oliver says.
“The clearance rates are a bit down from the highs [at the start of the year] ” he says.
“But the basic picture looks to be that there is still a supply shortfall relative to the underlying demand for housing … this will continue to drive activity and sustain the market this season, despite the high-interest-rate environment.”
On the ground, Michael Pallier of Sydney Sotheby’s International Realty says he’s experienced very “consistent sales” albeit not at the same rate as last winter.
“Winter is traditionally a quiet time, but we’ve had a good run,” he says. “I would’ve thought talks of interest rates possibly going up would pull the market back a bit but it hasn’t seemed to have done that. We have a lot of inquiries coming through from buyers.
“There’s not an oversupply of stock, which is a good thing for now because that supports prices. We’ve had a solid run so far with stock and buyers and I think that’ll continue.
“Last winter was unseasonably busy so it seems to have cooled somewhat compared to last but it’s still great.”
The latest Domain House Price Report revealed that the combined capitals’ median house price reached a record $1,154,394. House prices also peaked in a number of individual capital-city markets including Sydney, Brisbane, Adelaide and Perth, as did unit prices in Brisbane, Adelaide and Perth.
In Brisbane, local agent Tony O’Doherty of Belle Property Bulimba says the cold has done nothing to stop the Brisbane property market, which has been going full-steam ahead since the start of the year.
Brisbane’s median house price is now at a record $976,464, and is expected to hit the $1 million mark by next year.
“It’s been a great market … there is a lack of stock but that’s only put more pressure on buyers and on prices,” O’Doherty says. “Stock has been so tight so we’re getting multiple offers on everything.
“I recently sold a property for circa-$1 million and that had eight registered bidders, then sold another property for circa-$4 million and that had seven offers. So, buyers are persistent and that’s creating great outcomes.
“Even our days on the market have shorted to about 24 days – we’re selling homes in less than a month consistently.”
O’Doherty says Brisbane’s unit market is also performing very well. The Domain House Price Report shows that, for the first time, the median unit price in Brisbane has overtaken Melbourne’s, at $579,823.
“It used to be very stagnant for a long time up until 2017 but now with affordability constraints in some housing markets, lack of stock and migration – among other things – it has made unit sales very solid,” he says.
Harry Kontossis of Barry Plant Reservoir in Melbourne’s north says the local property landscape has been relatively busy, despite reports of a subdued market.
“Melbourne’s come back,” he says. “In my area, I’ve seen prices grow – not hugely, but they have grown.”
He says they have a few homes that are not yet on the market because some owners want to wait until spring, “but I’m telling them that there are buyers out there and if they want to wait until spring, they’ll be competing against a lot of properties … meanwhile, now is the right time to sell”.
Kontossis says buyers are cautious because of a potential interest-rate rise which could temper property prices in coming months.
“If we get an interest rate rise, that’ll definitely put a damper on [the market] in the next six months,” he says. “It’ll throw people into a negative spin and might even force some buyers to park the idea of buying.
“And then, if we have an interest rate fall, it’s not going to spark the market by much either because people will say, ‘If there’s a decrease today, there might be an increase the next month.’ So they’re very cautious … what we’ve got now is what we’re going to get.”
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