Economic uncertainty sends housing market into caution-mode

Upcoming tough economic conditions are set to mute the market and equalise the playing field between buyers and sellers as the number of properties on offer to rise nationally.

Michael and Natalie Ajaje are selling their home in Bulimba, Brisbane by auction. Picture: Lyndon Mechielsen

Tough economic conditions are set to mute the market and equalise the playing field between buyers and sellers as the number of properties on offer to rise nationally.

The Reserve Bank’s move to raise interest rates by 75 basis points in the past six weeks and inflation-linked cost-of-living pressures on household budgets have created a more cautious environment across the national property market.

Heading into winter – traditionally a quieter time for sales and listings – the total number of properties on offer climbed 0.9 per cent nationally from March to May, according to PropTrack. But the number of new sellers willing to test their home has fallen 13 per cent, despite a spike through April.

Geoff Lucas, managing director and CEO of national real estate firm The Agency, said agents are having to do more work to get buyers across the line as the market becomes “friendlier”.

“The market has gone past equilibrium in Sydney and Melbourne and is very much a buyers’ market,” he said. “Prior to Christmas, it was a race to secure listings and they were pretty much selling themselves. Now, people can take more time and be more deliberate, which is how it should be.”

 

The slower rate of seller participation and more choice for buyers is unlikely to change in the near future. PropTrack director of economic research Cameron Kusher has revised down his price expectations given rates are set to continue rising, now believing prices could fall 10-15 per cent, with the larger declines to hit Sydney and Melbourne.

“Consumer confidence is already in the doldrums and the cost of living is rising significantly,” he said. “Also … (with) the increase in inflation, we’re not seeing a commensurate pick-up in wages yet.

“Moving from a cash rate of 0.1 per cent to … potentially 2 per cent in the space of less than 12 months, that is a big shock for people and it’s going to lead to a lot of caution from buyers and sellers.”

Mr Lucas said the slowdown is not affecting all markets equally.

In Brisbane’s leafy inner-east peninsula of Bulimba, Michael and Natalie Ajaje, believe their luxury, ultra-modern home will find a new owner when it goes to auction next month. Interior designers by trade, the couple are hoping to cash in on demand for turnkey homes by selling the property with $250,000 worth of furniture and linens.

“We do know the heat has come out of the market but it is ticking along compared to Sydney and Melbourne,” Mr Ajaje said.

“It is a higher-end-of-the-market home and … in that field, it’s different to mums and dads with big mortgages.”

The Ajajes’ agents, Ray White Bulimba co-principals Scott Darwon and Brandon Wortley, said conditions are more reflective of a “normal market”.

Mr Kusher expects the spring selling season to be a true test of the market.