Autumn 2018 market wrap

As the weather cools, so too does the property market

With Autumn drawing to a close and the Royal Commission continuing to cause ripples throughout the financial sector; banks are being exceptionally cautious with their lending, and this in turn has resulted in some buyers finding it a challenge to get their loans approved. This financial nervousness has had a knock on effect on buyer behavior and we are seeing that properties are selling for an estimated average of 5 – 10% lower than at the peak of the market in 2017.

What is interesting about this slowing market is that unlike during the GFC; when vendors were distressed selling and driving the prices down, this dip seems to be primarily due to the restricted borrowing capacity of buyers. Our observation is that vendors are selling for genuine life changes. So as much as buyers are hoping for bargain sales due to financial pressure and strain, this is actually not the case.

There has been no movement as far as the cash rate is concerned and the release of the Federal Budget brought little concern or excitement. The Budget is not expected to have much impact on house prices or interest rates.

What are your market expectations heading into the winter months of 2018?

We expect the market to begin to follow a new trend and one that sees the regional markets outperforming the capitals, with the more affordable segment of the market to outperform the more expensive, top-end of the market.

The new trend will be driven primarily by the continued tightening in lending and financial restrictions from the banks. As a result of this, we believe the market will continue along a controlled slowing path over the Winter months with little chance of a market rebound.

However, with mortgage rates likely to remain low for the foreseeable future and affordability issues easing, we don’t see dwelling values declining significantly in the coming months.

In the rental market, growth is trending upwards, but at a very sluggish rate. We believe this slow growth will continue in the coming months as dwelling values are putting some upward pressure on rental yields.

12th June 2018


Craig Sewell