The world of real estate is in constant change as we migrate through the cycles. Stay in the game long enough and you soon recognise another cycle rippling your way, and so it is for the present north coast market.
The best description we have for the current market is that it is softening. You will likely have seen much speculation in the media about changes in real estate values, with discussions centering around the impact of interest rates finally coming off their record low base and increasing month on month; high inflation; excessive prices for fuel and food; and ongoing challenges to supply chains. All of these factors do impact the real estate market as they affect a person’s capacity to both obtain and then repay their mortgage, but the good news for us here is that a softening market is far from a cliff and gives us much to work with.
The silver lining: Certainly, interest rate rises have slowed down what was a pretty hot market. While we are never aware of it at the time, looking in the rear-view mirror we can determine that the recent market peaked in April 2022, and is now adjusting marginally downwards.
Interest rate rises have the effect of slowing demand for new property as would be borrowers grow concerned at their capacity to meet their loan.
In many ways, the current market feels much more like a ‘normal’ market. We continue to experience steady demand; people still need to buy and sell; but the frenzy of recent times coupled with the FOMO effect has passed.
A year ago, it was common practice for people to buy first before selling due to demand pressures. Do otherwise and you risked being homeless in the interim. Now, sellers have more time, and can sell first before looking around and making a purchase. It’s a much less stressful scenario.
Days on the market is always an interesting indicator of market forces, and in recent weeks we have witnessed this gradually extend outwards. At the present time, time on the market is four to six weeks. However, this extended time can also be attributed to buyer delays with finance.
We are no longer seeing the cashed-up Sydney migration, so the buyer pool is mainly comprised of locals who are needing finance to make a purchase. And with interest rates rising, this is having the effect of lowering people’s borrowing capacity.
Another signal of a more ‘normal’ market is that some buyers, who were previously missing out as they were either financially disorganised or taking too long to make decisions, now have the time and the opportunity to get their toe into the market.
Sellers are typically now able to offer more flexible terms such as longer settlement times, and this is another sign of a more balanced market.
The numbers of people attending open homes has dropped. We usually have one main buyer who leads the charge, but they are still wanting to look around a bit before deciding. Multiple buyer competition is not as common as it was six months ago, but there are still plenty of instances where bidding competition for properties is fierce. Without competition, buyers are in a better position to negotiate on price.
The most sought-after properties are new homes. This is largely due to the current disrupted building sector, with building material availability and price fluctuations making renovations more expensive and time consuming.
Read more in my Spring 2022 newsletter . . .