There seems to be much being written right now in the media about the real estate market dropping, particularly in Melbourne and Sydney. We are currently seeing an auction clearance rate in Melbourne in the mid 50s, which tends to lean towards what is considered a buyer’s market.
What we certainly can see right now is that money to buy a home is getting harder to acquire. A home buyer looking to get finance now may find that the figure they were able to comfortably borrow even just a few months ago is less than what a bank may now be prepared to lend them today.
Lenders are also being far more stringent with their checks as to how you spend your money and on what. Eg: I’ve heard they even want to know what Netflix plan you are on. This is probably due largely to the banking Royal Commission and the fact that
many of the banks got their hands slapped for what some considered to be dubious banking practices.
Many banks are being far more cautious as a result.
If there are fewer people in the market looking to buy (because they have less cash available to them to do so), this can tend to pull property prices back as the demand will not be there.
Add to this that the cost for a bank to acquire money on the world market has increased, this may result in interest rates increasing after an extended period of record lows. That becomes a case of not if, but when.
As you may have seen written elsewhere, many have suggested even a small upward interest rate movement will put many households into mortgage stress territory. Some home owners would then need to sell, which can further reduce property prices.
As Spring approaches (traditionally when most sellers will put their homes on the market), if there are more homes for sale than buyers willing to buy them, this too can lead to property prices falling.
