Real estate, RBA rates: As house prices fall, buyers will avoid unrenovated homes

Australia’s property market is already “stabilising”, with rising interest rates scaring off borrowers and forcing sellers to accept lower prices.

But not all homes are created equal, and buyers are becoming more selective – newly renovated and turnkey properties are now in demand, auctioneers say.

Stefan Stella of Ray Wyatt Glenroy, a $1.5 million East Brunswick terrace sold to a young couple “, which went viral over the weekend, said there had been “a bit of turbulence” in the market but that “anything priced right will sell”.

“I had another auction on Saturday that was a completely dead duck, no action,” he said.

That property, a 700 square meter corner block development site, would normally sell for between $1.3 million and $1.4 million, but it topped out at $1.1 million.

Given the crisis in the construction industry, Mr. Stella said properties that have already been renovated are more desirable.

“Basically anything that requires work, people now consider the additional time and cost,” he said.

“Barkley Street was unique, the best street in East Brunswick.”

When prices began to fall earlier this year, Mr. Stella said many sellers took a haircut on “prime property” that was on the way to selling at a higher price a few months ago.

“With the negativity in the media in the last three or four months, I would say that now most people are used to the market, but in the beginning three months ago, when the market was not competitive, they used comparable sales,” he said.

“That’s where it got tough. Everything is still for sale as long as the correct price is given.

Mr. Stella was badly affected by the collapse of the apartments, followed by unrenovated properties.

“And then the townhouse market, I think because of the price point, generally holds its own a little bit more,” he said.

Meanwhile, Sydney-based auctioneer Tom Panos said in a video update on Saturday that seven of his 10 auctions that day had sold.

“This is a very good result – 70 percent today, which tells me two things,” he said.

“The number one thing that comes to the market is consistency and regularity.”

Mr. Panos said the medium is “the best supplier manager in real estate right now.”

“Every time I walk into a property, the first thing I ask is, ‘Mr. and Mrs. Seller, what’s your understanding of the current market?’ Nine out of 10 sellers say, ‘We know it’s hard, and we know it’s getting harder’. That’s why you’re getting sellers who will either give you realistic reserves, or typically give you an optimistic return number that’s good enough to sell the property.

After a few weeks of “OK results” — Mr. Panos said in July, he was “very worried” after no buyers showed up to their bids — Real Estate Coach said, “There’s stability in the market and people will accept these.” The new values ​​”.

“The real question is what’s going to happen in the September, October, November market reviews now that we’re done with winter and moving into our fall selling season?” he said.

“One would think that more details should see price softening. But the softening has already happened. I’ve said it before, there’s a data lag where economists are missing three, four months. The market has changed by 10 percent, even 15 percent in most areas, even 20 percent in some markets.” But realistically, we’ll probably see another softening to around five, 10 percent. I think we’re close to the bottom.

“Each time there is a price increase equal to 1 percent, it basically means that borrowers get a 10 percent discount from the bank,” he pointed out.

“So if you get a 2 percent increase in interest rates, you’re looking at roughly a 20 percent reduction in bank lending to buyers,” he said.

“This is a very important number, because what it basically tells us is that if prices continue to rise at the current rate, buyers will have less money.”

Mr. Panos speculated that this is why “a few buyers are rushing in and snapping up properties.”

“They sit down with their mortgage broker and their broker basically says, ‘Listen, there are two sides to this. Yes, there could be another rate cut, but since you’ve already put it down, and you got this loan now, take advantage of it, secure the home you love, and even if you don’t buy it at the bottom, you’re keeping it for the next five, 10 years. But guess what happens if you don’t buy it now? You might not have the same money in the marketplace because you’re going to be evaluated by the banks.’

It comes after the Reserve Bank raised interest rates for the fourth month in a row last week.

The 50 basis-point increase at the central bank’s August meeting will bring the official funds rate to 1.85 percent, from a record low of 0.1 percent until May.

In the past, rising interest rates have pushed down house prices in most major cities as borrowers stare down the barrel of higher monthly payments.

PropTrac’s home price index showed a nationwide decline of 1.66 percent since March, but some regions saw sharper declines.

“As interest rates rise, as payments become more expensive, housing affordability decreases and prices decrease,” said Eleanor Craig, senior economist at PropTrac.

There were 1,080 auctions across the country on Saturday and 51.3 percent were sold, according to PropTrac’s pre-licensing volume data.

Melbourne saw 364 bids for 59.1 per cent, Sydney 354 bids for 48.9 per cent.

“It’s been a quiet week for auctions across the country,” Ms Craig said.

Permits rose despite a third consecutive price increase last week, pushing cash levels to their highest level in six years in Brisbane, Melbourne, Sydney, Adelaide and Perth. Perhaps after several months of falling prices in some parts of the country, we’re reaching the point where sellers’ valuations have fallen, so more properties are coming up for auction.

Ms Craig added that buyers’ borrowing power would be “constrained by further increases in affordability and some are already taking advantage of the increased choice”.

“New listings continue to be strong and, although prices are falling, there are many choices for buyers,” she said.

“This means that as housing market conditions continue to increase, sales volumes are decreasing.”

Related Posts

16 great country houses selling from £450,000 to £6m as seen in Country Life

Our regular roundup of some of the best homes for sale in Britain is a holiday-friendly county home in Sussex. West Sussex – £5,950,000 An unapologetically charming…

Seattle’s housing market is headed for a recession.

What goes up must come down. That seems to be the motto of the U.S. housing market right now, with some of the nation’s most expensive and…

Ant Anstead Is Selling The Laguna Beach ‘Dream’ Home He Bought After Splitting From Christina Hack – See Photos!

There are some big changes for TV personality Anstead. On Wednesday Celebrity IOU: Joyride The co-host has listed his Laguna Beach, CA home for $3.3 million. Garbage…

San Anselmo adopted new rules after the garden was broken

San Anselmo has implemented new rules for community gardens based on how the city’s amenities are managed. The City Council unanimously approved a new ordinance Tuesday to…

Property: A thriving housing market in Dunfermline and West Fife

Dunfermline continues to be the “hub” for first time buyers in East Central Scotland. ESPC’s latest property report figures show that house prices in the city rose…

FOR SALE: Take a look around this stunning Wirral property with covered BBQ area and fireplace

The family home is immaculately finished and close to the beach. This beautiful detached house is for sale at £1,225,000. In the popular Wirral area, Hoylake, a…

Leave a Reply

Your email address will not be published.