Experts from BuyersBuyers believe that the current downturn has already moved past its “peak fear” phase.
BuyersBuyers co-founder Pete Wargent said the series of rate hikes and the likely increases over the coming months are likely to cause further declines in the market.
“There hasn’t been a tightening cycle of this pace and magnitude since 1994 – when the cash rate target went from 4.75% to 7.50% between July and December — so most young borrowers have never seen anything like this before, and it had a very significant impact on consumer confidence,” he said.
However, Mr Wargent said the slowing of rate hikes in October, with the Reserve Bank of Australia (RBA) going back to the usual 25 basis point hike, adds to the general sentiment that the upcycle is nearing its end.
“After months of gloomy headlines, eventually consumers tend to tire of hearing the same old messages and move on, particularly in the absence of a major property price correction, and a lot of buyers are doing just that now. At some point you just must choose to get into the market,” he said.
According to CoreLogic, dwelling prices in capital cities are now 6% below their peak.
BuyersBuyers CEO Doron Peleg said more while further declines are expected, there are signs that show a rebalancing in the market.
“Property market indices tend to lag, because there’s always going to a delay between offers being made and property sales being settled, recorded, and reporte — so price indices will likely show further declines for some time to come yet,” he said.
“However, the peak of the ‘fear’ phase of the cycle now appears to have passed, and price declines are likely to become less steep from here, before being confirmed as bottoming out in the new year.”
The latest auction figures, which show the highest preliminary clearance rate since May, is one indication of improving buyer sentiment, particularly in Melbourne and Adelaide.
“Brisbane’s house prices are seeing some of the speculative excess wiped away this year, but we’ve also seen unit and townhouse prices rising in many cases,” he said.
“There are still some areas of weakness in Sydney, but stamp duty being scrapped for first homebuyers up to the $1.5 million price point in the new year will likely see a recovery driven from the bottom of the market up.”
Meanwhile, Mr Wargent said the opening of Australian borders bodes well for the property market.
“With the borders open and permanent migration ramping up again in tandem with the return of international students and other temporary visa holders, we expect to see the resident population of Australia increase by a million over the next two to three years,” he said.
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