Australia Property Market Slowing: Interest Rates Impact Sydney and Melbourne Growth
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How are rising interest rates affecting the Australian property market?
It's the Real Estate Podcast, brought to you by ANZ Home Loans for financial well-beings. So we got that the last weekend of January was over 70%. The first weekend of February was over 70%. Then the rate rise, I mean, bang, it went under 70% into the sort of balanced territory. And we've just seen it declining all the way. Since then, and in fact, the weekend before Easter, we had record, I don't think it was nearly 1,900 properties listed for sale by auction in Sydney. on that weekend. I can't recall a weekend when it's been that high. 1,500 is normally seen as huge, right? And nearly 20% of those are withdrawn prior to the auction.
What trends are emerging in buyer confidence and auction clearance rates?
And that's usually because the owners and the agent, one or the other or both, are not confident they're going to get the result that they want. That shows vendor confidence waning, as well as obviously clearance rate dipped to 55%, showing that that's well and truly a buyer's market. Yeah, what about the vendors at the moment? Because, as you say, some of them were pulled out of the auction. There's still this headspace, isn't there, where people just seem to think that their properties are, you know, you go back 12 months ago, they're in that range when they're clearly not. It's just a cycle, though. It takes time for them to catch up before they fully sort of grasp reality. We find that whenever there is a major change, so an external shock, I guess, that impacts the property market, we find that any campaigns that are sort of caught out in the middle of that, that's a bit unfortunate because those owners start off with one set of expectations and then something shocks the market, which means that that set of expectations is not necessarily going to be delivered on.
And so then they've got to decide, well, do I want to meet this new market or not? And so that's why you will see that level of, or that percentage of properties that are withdrawn from market, you will see that spike under those circumstances because those people don't necessarily have to sell. And I think too, that's the about established markets when if you're looking at a market where there's a lot of you know properties being bought off the plan for example they're only a few years old and people are hit hard times you're going to see a lot of stock come on the market it's all very similar very homogenous and a similar price and a lot of people in a very similar debt situation same with house and land packages but when you're looking at those established markets
of inner and the middle rings of Sydney and Melbourne, for example, people don't have to sell necessarily. I guess those last in with high debt might feel extraordinary pressure, might have to, but that's not the majority of those markets. Yeah, and with this particular shock, you're talking and interacting a lot with investors. What are the investors telling you in terms of buying stock at the moment? Are they saying, whoa, let's just sort of wait and see what's going to happen. This is very unstable. We only have to look at the petrol pump to see how all of that has risen over a very short period of time. What I find typically is that investors might think they're being logical, but they're often not.
In reality, buying in a falling market is a great idea. As long as the market's got fundamentals and you've got long-term objectives and you're able to buy a good asset, then you can ride out these bumps in the market over time, right? But most investors don't look at the property that way. They look at where can I get an immediate gain? And that's the reason you've seen a lot of investor activity actually in Melbourne. It's one of the reasons why, let's look at Melbourne for a minute. Melbourne's been in the doldrums, has been undervalued, if you want to call it that, for some time. A lot of investors from interstate, people that have got huge equity gains in the last, say, five-year boom in Perth and Adelaide and Brisbane, for example, they're now turning their attention to buying interstate in Melbourne because they're thinking the same thing's got to happen in Melbourne.
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Chapters
5 chapters
1
How are rising interest rates affecting the Australian property market?
0:02–0:40
2
What trends are emerging in buyer confidence and auction clearance rates?
0:40–4:14
3
Why are some properties being withdrawn from auction?
4:14–7:42
4
What challenges are first home buyers facing in the current market?
7:42–14:57
5
How are investors responding to the current property market conditions?
14:57–17:05
Speakers
3 identifiedMore from Aussie Real Estate Podcast
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