The market will soon return to normal operation
- Written by Tim McKibbin
The market will soon return to normal operation and when it does, we expect conditions to resemble that of late 2022.
The drivers remain the same: demand is robust yet buyers remain cautious not to overspend, there’s hesitance among consumers owing to the general uncertainty around inflation, interest rates and the potential for more increases, and the impact of the war in Ukraine on energy and food markets.
Some vendors are taking a wait-and-see approach to see where values land.
It has been widely predicted that there will be a lot of distressed sales commencing in April. How that plays out will be dependent on how the RBA and Government manage inflation and how the banks assist mortgagors.
The upcoming state election is another variable which could serve to temper market activity as the major parties use the housing crisis as a platform to engage in one upmanship in a last-minute scramble for votes.
Rather predictably, announcements designed to appeal to the populace are taking precedence over proper policies with the potential to effect necessary change.
There has been plenty of speculation about the behaviour of investors this year. Rates will ideally stabilise at some point – hopefully soon - and a return to price growth is a possibility in the short to medium term.
Some have suggested these factors will encourage investor activity but the question is, what are they going to buy? The lack of supply of homes for people to buy and rent is the crux of the housing crisis and no amount of pro-tenant legislation and anti-landlord rhetoric will address this.
Auction season will resume in full in coming weeks and it will be interesting to see if clearance rates pick up where they left off. Last year ended in encouraging fashion with value on offer for buyers and fair prices achieved by vendors.
But the market is far from healthy. There simply aren’t enough homes for people in NSW. A healthy market is one which offers opportunities for all buyer cohorts as well as choice for tenants.
