Valuation Challenges in Shifting Market
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What market context and episode overview does the host introduce at the start?
it's the real estate podcast brought to you by ray white the largest real estate and property group in australasia and welcome to another episode of the real estate podcast available on iheart radio and also spotify and apple podcasts or wherever you get your podcasts from Well, it's another Friday morning, the 6th of May for 2022. In just a moment, Rich Harvey is here from propertybuyer.com.au and we're going to be having a look at valuation challenges in a falling market in 2022. I think nobody can disagree that the market at the moment is falling. And also coming up tomorrow, what is happening in Canberra with the median house prices? Every Canberra region now has a median house price of $900,000 plus.
Well, Tim Burke is a local real estate man on the ground there in Canberra, and he is going to give us the lowdown as part of the weekend breakfast tomorrow morning.
It's the main centre forecast with propertybuyer.com.au.
Around Australia we go and first to Sydney expecting a mainly fine day with sunshine in 21 degrees. Melbourne a little bit cool, just 17 degrees with one or two showers. Brisbane rain with 25 degrees and in Perth blue skies and a fine one with 24 degrees.
If you've got a question that needs answering, you can email us at myrealestatepodcast at gmail.com. Let's Talk Property, a podcast series with Rich Harvey.
Yes, it is that time of the week and for many buyers, especially in Sydney and Melbourne, it probably feels like the market has turned on a dime.
How have recent interest rate rises and Q1 data shifted buyer sentiment?
Price growth in the first quarter of the year has been flat with interest rates starting to rise, not helped by the increased cost of living and international uncertainties all playing a factor into this equation. And remember it wasn't that long ago when you purchased a property you could almost guarantee the value rising immediately. But that wave has passed, which presents a new problem for anyone who is relying on a formal bank valuation for unconditional finance to see them over the line. It's a good subject to discuss this morning. And it must be a Friday because we're discussing it with Rich Harvey, CEO from propertybuyer.com.au. Good morning, Rich. Good morning, Craig. Good to be with you.
Yeah, such a big week. You know, the RBA has made that move and we've had a busy one talking with CoreLogic and Domain with their reporting of the first quarter in particular. And the data is just coming very quick and fast at the moment.
Yeah, well, look, there is always anticipated. You know, I'm one of 32 economists that do the Finder survey and also I participate in the National Australia Bank quarterly property survey. And they're always asking the question, when will the first interest rate or when will interest rates rise and what quantum will they rise?
What immediate effects do rising rates have on buyer numbers and listing volume?
You know, I was predicting either a May or a June rise for the first one. But this is the first rise quarter percent in 11 years. So it's quite an unusual scenario. So a lot of people, a lot of investors, even a lot of selling agents haven't experienced a market where we've got rising interest rates, you know. But this first rise is really majorly affecting sentiment. Now, I mean, we've got to look at it in context. There's lots of conjecture about how far and wide this one interest rate increase will be, but obviously a reserve bank is signaling it's not a one-off. There's going to be multiple increases.
What are the settlement-period risks if a bank valuation comes in low?
So I think we've got another potentially three interest rate rises this calendar year. and then maybe another three or four in the following year. So, I think the cash rate will probably settle around 1.75% to 2%. Craig, the initial effect it's having on the market is obviously pushing buyers away. There's going to be less buyers. We're going to see the volume of listings increase. It also spells opportunity. So, I don't think buyers should be scared off by this market. It's just a natural part of the property cycle, correcting.
Yeah, it will be very interesting to watch that. And you know that valuations are such a critical part of the buying process.
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Chapters
8 chapters
1
What market context and episode overview does the host introduce at the start?
0:02–1:52
2
How have recent interest rate rises and Q1 data shifted buyer sentiment?
1:52–3:11
3
What immediate effects do rising rates have on buyer numbers and listing volume?
3:11–3:45
4
What are the settlement-period risks if a bank valuation comes in low?
3:45–5:13
5
How do valuation timing and repeated bank valuations increase buyer risk?
5:13–8:27
6
What practical steps can buyers take when faced with a low bank valuation?
8:27–11:21
7
How can contract clauses, cooling-off rights, or lender shopping protect buyers?
11:21–11:57
8
What lessons does Rich Harvey share from his valuation experience and final advice for buyers?
11:57–12:43
Speakers
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