MARKET UPDATE

FRIDAY, 6 May 2022: 

So it finally happened – the Reserve Bank has raised the interest rate

But that is not a cause for despondency says Gerard Fitzgibbon from Maison Advisory.

After months of speculation and so much dreaded anticipation, the RBA raised the interest rate this week and the banks wasted no time passing it straight on to borrowers. But, as is so often the case, the waiting was worse than the doing. The sky has not fallen in, the property market has not crashed and the sun still came up in the morning.

There can be no doubt the market is slowing – certainly a rise in interest rates just weeks before a Federal Election has ended any uncertainty about that. But it is settling from a crazy market where prices last year jumped by 23 per cent to a normal market. And that is good news for an awful lot of people looking to buy and sell homes.

First home buyers will not be sad to see an end to sharp prices as they look to take advantage of the extended loan guarantee scheme. Rising rental prices certainly make buying a better option and those rapidly rising rents also make the market attractive to investors. Sellers are also able to take a breath and enjoy longer transaction times – buying back into a rapidly rising market is far more stressful than choosing carefully in a settled one.

Now the shock of the interest rate rise is over, the rest of the market can take stock. Put in perspective, the average Sydney household made $300,000 in tax free gains on their home last year so an average monthly mortgage increase of $29 a month does not look so bad.

A lot of property players have put their cue in the rack until after the election. Despite that, listings in our area increased from 18 to 36 last week with sales more than doubling to 22. This is the calm before normal service in a settled market resumes after the election. If you have your eye on the right property for your family and your needs right now it is a good time to act before everyone else wakes up again.

FRIDAY, 29 APRIL 2022: 

THERE HAS NEVER BEEN A BETTER TIME THAN RIGHT NOW TO BUY A HOUSE 

Now hang on a minute! Never been a better time to buy a house? What about the Federal election, the war in Ukraine, the looming rise in interest rates and subsequent property market crash? How can anyone be so positive in such a time of doom and gloom?

Well, let’s take things a step at a time. It is not actually a time of doom and gloom. The property market always tends to slow before an election and then pick up again immediately afterwards, particularly when there are no major policies tabled that will impact the wider market. The war in Ukraine could see economic impacts that will add inflationary pressure in Australia which in turn will inevitably lead the Reserve Bank of Australia to put up interest rates. That means buying now will secure more money more cheaply. And the reality is that even four or five rate rises will only see a mortgage rate above three per cent, which is still pretty low and will not dampen demand.

It is true the market has corrected itself from the red hot sellers market that drove up prices by an average of 23 per cent last year. But that correction in Sydney, according to CoreLogic, is just 0.1 percent and even Chicken Little could not say the sky is falling in at that rate.

What it does mean is that vendors are becoming more realistic about the prices they are asking and taking for their properties. Good homes are still selling quickly and for a fair price.

Despite all the uncertainty in the world life goes on and people still need to move, downsize, upscale and get the right home for their circumstances. Even though listings in our area rose from eight to 18 last week, that is still nowhere near enough to meet the demand from buyers who are still circling the market. Many of those are sitting on their hands, waiting for the election and what will happen to property prices afterwards. They are the ones who will miss out.

The message for buyers remains the same – if you find the right home for your circumstances then act now and buy it before mortgage rates and home prices increase further. There will never be a better time than right now to buy and move into your ideal home.

FRIDAY, 29 APRIL 2022: 

THERE HAS NEVER BEEN A BETTER TIME THAN RIGHT NOW TO BUY A HOUSE 

Now hang on a minute! Never been a better time to buy a house? What about the Federal election, the war in Ukraine, the looming rise in interest rates and subsequent property market crash? How can anyone be so positive in such a time of doom and gloom?

Well, let’s take things a step at a time. It is not actually a time of doom and gloom. The property market always tends to slow before an election and then pick up again immediately afterwards, particularly when there are no major policies tabled that will impact the wider market. The war in Ukraine could see economic impacts that will add inflationary pressure in Australia which in turn will inevitably lead the Reserve Bank of Australia to put up interest rates. That means buying now will secure more money more cheaply. And the reality is that even four or five rate rises will only see a mortgage rate above three per cent, which is still pretty low and will not dampen demand.

It is true the market has corrected itself from the red hot sellers market that drove up prices by an average of 23 per cent last year. But that correction in Sydney, according to CoreLogic, is just 0.1 percent and even Chicken Little could not say the sky is falling in at that rate.

What it does mean is that vendors are becoming more realistic about the prices they are asking and taking for their properties. Good homes are still selling quickly and for a fair price.

Despite all the uncertainty in the world life goes on and people still need to move, downsize, upscale and get the right home for their circumstances. Even though listings in our area rose from eight to 18 last week, that is still nowhere near enough to meet the demand from buyers who are still circling the market. Many of those are sitting on their hands, waiting for the election and what will happen to property prices afterwards. They are the ones who will miss out.

The message for buyers remains the same – if you find the right home for your circumstances then act now and buy it before mortgage rates and home prices increase further. There will never be a better time than right now to buy and move into your ideal home.

THURSDAY, 14 April 2022: 

Happy Easter!

Despite the sinking feeling in the current market, there is still time to move more than the deck chairs.

Although those of you trying to manoeuvre in the current property market may feel holidaying right now is exactly how the passengers felt dancing on the deck of the Titanic.

The property icebergs we are currently facing are, firstly, the uncertainty surrounding the outcome of the federal election. Despite Anthony Albanese’s rocky start to the campaign there is still a chance he could win and that could destabilise the market further. The second big iceberg is interest rates. The current speculation is that the Reserve Bank of Australia could start to raise interest rates as soon as next month and then ramp them up very quickly. The final distant iceberg is the war in Europe and its impact on the global economy.

Back at home, property numbers are down. There were 12 new listings in our area compared to 15 the week before – across 20 suburbs the numbers are down by almost 20 per cent. Auction numbers are also decreasing, particularly when compared to the bumper Saturday before the start of the school holidays, with just nine in our area on Saturday and 11 on the 23rd. That stock is not expected to be replenished until after the election.

But is it right to be so cautious? Everyone is nervous about the impact of the election but in previous years elections have not had a major impact. In 2010 the election was held in the middle of winter when sales are slow anyway, prices were not affected. In 2007 the election was held in the November peak selling season. Just as predicted with this election, in 2007 the RBA hiked up the interest rate before the votes were cast, and – you guessed it – house sales were largely unaffected.

So, what does all this mean? If you are looking to move to a more suitable home, you will be buying and selling in the same market so it makes no sense to wait out of an overabundance of caution. If you are waiting for prices to go down and need a mortgage you need to factor in being able to borrow less later in the year and the extra cost of paying for it.

Sydney house prices may drop but they always bounce back. The message remains the same, if you find the right home for your circumstances and your family then now is the right time to buy it. And then you can sit back in your deckchair and watch everybody else dance.

FRIDAY, 8 APRIL 2022: 

JUST BECAUSE LOTS OF PEOPLE SAY IT, DOES NOT MEAN WHAT THEY SAY IS NECESSARILY TRUE

Particularly when it comes to Sydney’s property market warns Gerard Fitzgibbon from Maison Advisory.

It is really not that bad. But if you were to read the Chicken Littles’ who appear to be writing the real estate columns in Sydney’s media you would think the property market sky had fallen in.

Yes, in our area new listings are down by 25 per cent to 15 and 14 properties were passed in or withdrawn. The media pundits explain that the imminent election, more than likely to be called this weekend, and the promise of interest rate rises has softened the market.

But the stories we hear change the way we think and what we believe. Psychologists know that the neural activity in our brain increases fivefold during storytelling. The neurons that are firing and wiring together into new neural pathways become our beliefs. In other words, if you read it often enough you believe it.

The other side of the story of what is happening in our area is that there were 32 sales, up by almost 30 per cent on the week before, there are a massive 43 auctions scheduled for Saturday April 9th and of the 15 price guide changes this week almost half went up by an average of six per cent.

What we are seeing is that A-grade, fully renovated, tick-every-box homes are selling very well – a beautiful home in Reginald Street Mosman with a price guide of $19 million has just sold for $19 million. Homes that are almost there but have a few caveats are still getting bites but they are not flying off the shelves like they were when prices were skyrocketing by 23 per cent last year. And homes that have got some problems, such as poor location, are not getting the attention. That is what is known as a perfectly normal real estate market.

What is important to remember is that if you are selling in this market you are buying in this market. Housing supply is up and the number of buyers registering interest is up so the market is in very good health. If interest rates go up they are doing so from a record low so they will still, actually, be very low. And what goes down in Sydney real estate will inevitably go up.

So if you are looking for your ideal home and you find it then do not hesitate – buy it. I guarantee the sky will not fall in.

Friday, 1 April 2022: 

it has never been more important to maintain a sense of perspective

As the market moves and speculation and rumours abound it has never been more important to maintain a sense of perspective.

Right now there is a feeling in the Sydney real estate market that is similar to the one you experience when you turn off a freeway into a school zone. One minute you are flying and the next it feels like you are crawling along. The important thing to remember is that you are still moving forward.

The enormous increase in house prices that saw them jump by 23 per cent last year has definitely slowed. But houses are generally selling for five per cent more than the guide price the agent gives at the front door.

Keeping a sense of perspective in this market is important. We know the Reserve Bank has indicated that interest rates will start to rise from June. What we need to remember is that the last time interest rates rose, home values increased.

It is also good to keep in mind that if you are a first-time buyer or a seller looking to move to another home that better suits your needs, in the Autumn you will be paying a higher mortgage rate on your property. And that mounts up over time.

Most experts are predicting that the number of homes offered will increase towards the end of the year. The number of newly listed homes has already increased for the last two months.

What that means is that if you are a seller, listing now and getting in ahead of the competition is a good idea. And if you are a buyer there may be even more to choose from in the Autumn.

But returning to that sense of perspective, the trend of increased supply has not followed through strongly on Sydney’s lower north shore. And in the Autumn returning investors and expatriates from overseas will increase the competition.

So we can expect a slight improvement in the number of houses to choose from in the Autumn when interest rates will have gone up and so will house prices – just not at the tearaway rate we experienced last year.

And that means that if it suits your family to sell, then now is a good time to do it, and if you are looking to buy and find the right home then now is the time to act.

Friday, 25 March 2022: 

Finally it feels like buyers can start to relax

However, Gerard Fitzgibbon at Maison Advisory warns against getting too comfortable.

What a difference a few weeks can make. We came into the year with a shortage of supply and sellers rubbing their hands in glee at the prices their homes were fetching. Fast forward to the middle of March and it is the buyers who appear to be holding all the cards.

The prospect of an interest rate from the Reserve Bank as early as June, a war in Ukraine driving up petrol prices and a federal election in May are all contributing to a cooling of the market. Plus of course the sudden influx of properties for people to choose from.

The luxury market on the Lower North Shore is still going well – a house in Stanley Street, Mosman, just sold ahead of auction for $33 million which was $3 million above reserve – but the days of automatically adding 20 per cent to the price you are quoted at the door are over. 

In fact six properties in our area have pushed back their auction dates, probably because of a lack of interested buyers. And ten properties have changed their price guides. Half of those reduced the price by as much as 10 per cent while the other half increased the price by between two and seven percent.

Right now it seems buyers appear to be a little reluctant to commit. As I mentioned last week, the property market operates in reverse. Stockbrokers like to sell in a bull market as prices rise and buy in a bear market as prices drop. Right now in Sydney house prices are dropping and buyers are shying away, they like to buy in a hot market. As the saying goes, everyone wants to buy what they cannot get.

They may not have to wait too long for the market to heat up again. In the Sydney housing market those prices always come back up. They may not be jumping by 23 per cent as they did last year but the growth is still there. New research from CoreLogic has found that between 2012 and 2017 the average Sydney home increased in value by an average of 75 per cent. From the moment the market bottomed out in 2019 to today some homes, including ones in North Ryde, have literally doubled in value.

Right now buyers are quietly looking at their options and thinking about whether to commit. But it is not the time to get comfortable. You are not speculating. If you find your dream home, buy it.

Friday, 18 March 2022: 

keeping a cool head in a hot market is crucial

However, it is equally important to maintain that cool head in a cooling market.

Unlike Toto’s lion in the jungle, the Sydney real estate market never sleeps. That’s because peoples’ homes reflect their lives and consequently keep changing. They upsize because they have started a family, downsize when those children leave home and part with property because of death and divorce. These changes happen irrespective of what the market is doing. 

Right now the market is cooling. Reserve Bank Governor Philip Lowe has warned that there will be interest rate rises this year. Financial experts are tipping there could be five rate rises with the first coming in July. Banks are also tightening their credit policies for mortgages and of course there is a Federal Election widely predicted for early to mid May. 

Despite that, or perhaps because sellers want to get in before the market drops too much, new listings in Sydney increased by 81 per cent. And that increase in supply is not drying up. This week I’ve seen some exceptional property’s off market. Properties that are very good buys from knockdowns in Waverton and Roseville to waterfront homes and tennis court properties in Mosman, terraces in Kirribilli and an array of sensational units across the area. 

Both of those factors, increased supply and extra cost, are pointing to a drop in house prices. Although it is worth noting even Commonwealth Bank’s most dire prediction was a 9 per cent fall, which is not even half of the 23 per cent average gain houses made last year.

When this happens buyers instinctively become cautious, which is counter intuitive to what happens in any other financial market. Stockbrokers sell in a bull market as prices rise and buy as prices fall in a bear market. In Sydney real estate they do the opposite. Baffling.

To return to my original point, people buy and sell because they have to, irrespective of whether the experts tell them it is the right time or not. Those keeping a cool head can do well. Right now there are some exceptional properties on the market generating enormous interest, one home in Willoughby I went to last week saw 52 groups through the front door. Prices can drop but they do bounce back pretty quickly. It is worth remembering the Mosman and Kirribilli suburb records were both broken this year. So it is about doing what is right for you right now. If you have an investment, hold on to it, if you find the family home you have been looking for, buy it and if you are an investor looking to get into the market, this is the time.

Wednesday, 9 March 2022: 

THe property market may be cooling but now is not the time to sit back and wait

Opportunities are like sunrises. If you wait too long you miss them. The American motivational writer William Arthur Ward may not have had the current Sydney property market in mind when he wrote that years ago, but it is certainly relevant.

Buyers have taken heart from the property market recording its first drop in prices for a year last month. But it was just a 0.2 per cent drop and barely made a dent on the whopping 22 per cent average jump in house prices over the previous 12 months.

The temptation is to wait. It is true the market is cooling. And the demand for homes is beginning to be met by the many new properties becoming available – last weekend saw the highest ever number of homes on the auction market.

Throw the uncertainty of a Federal election into the mix and it becomes clear that it is not quite that simple. Prices are steadying but we are not expecting the market to stop or see the enormous jumps in value from last year eroded. And while there are more properties on the market the auction clearance rate for the last two weeks has been at around 90 per cent.

Meanwhile interest rates are expected to go up in the second half of the year. That in turn is expected to lead to a tightening of credit policies for mortgages which will have the knock-on effect of dampening the market.

What that means in simple terms is that if you wait, what you can borrow will be reduced and will cost you more. At the exact moment you have less money in your pocket the market will be dampened by the financial moves and there will be fewer properties to choose from. 

Just as the $3.5 million you had to spend in Willoughby last year will not buy you the same house now, it will buy you even less this time next year.

As always, it is about finding the right home for you and your family. But if you think you have found it don’t wait in case something better comes along. Even if it does you might not be able to afford it. Remember, opportunities are like sunrises.