Why a property market pullback is good
Clients are asking us why a property market pullback is good?
With doom and gloom surrounding the Victorian housing market, fear tends to guide our opinion on the condition of the market. The market cannot go up for ever and we have had a long period of positive growth in Melbourne.
Media outlets will use various negative descriptive words to make you assume that the market is in peril. We urge you to take an objective view on the current market conditions in Victoria. This is a pullback, a perfectly healthy way for a market to behave. If a market were to keep showing strong gains without a pullback, a pricing bubble will form. Bubbles tend to crash harder the longer they run.
Australia’s property market begun the pullback around December 2017. Why is this? Tightening of lending criteria by lenders as a result of the banking Royal Commission have had a big impact. Lending less, to fewer borrowers and really squeezing anyone earning income in foreign currencies to the point that they may not be able to borrow at all.
According to Tim Lawless, head of research at CoreLogic, the rate of property value decline is begging to soften in an article for Business Insider Australia “In December and January, Sydney dwelling values were falling at a monthly rate of 0.9%, reducing to 0.6% in February and now 0.3% in March. If the trend towards an improving rate of decline persists, the Sydney housing market may have already moved through its peak rate of decline, after dwelling values have fallen by 3.9% since their end of month peak in July last year” said Mr Lawless.
Don’t expect markets to fire up at the same relentless momentum that we’ve seen in the past few years. A healthy, performing market will take some time to consolidated and store energy for the next move upwards.
One added bonus for a market in soft decline is that the buyer can have more power in the transaction. You can be picky, negotiate harder and the sense of urgency has decreased. If you are able to access funding and are in position to move up the market, now is the perfect time. After many years of positive growth, most property owners have developed equity and when they sell will have made profit. This can be reinvested in a better home. Consider selling your apartment, unit or single fronted home and buy yourself a bigger, better home. Buyer Solutions are ready to help home buyers wanting to exploit more favorable buying conditions that the spring property market may present.
Buyer Solutions vendor advocacy services can help you sell and our buyers agents can help you buy.
For up to date information on what’s happening in real estate in Melbourne, contact me at jspencer@buyersolutions.com.au or 0418 101 146.
Buyers Advocate, Housing Market, Investment property, Janet Spencer, Real Estate News & Opinion, State of the market
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