The interest rate rise last week has been followed by reports that the real estate market is faltering. Some say Australia is experiencing a real estate bubble that is about to burst. Others claim housing prices are sustainable at their current levels.
Personally I think the commentators and ‘experts’ should chill out a little. Yes the GFC hit the local real estate market hard but still they claim a ‘bubble’ exists.
When I’m asked about the prospect of the domestic real estate market going into freefall I answer with a question. If the GFC didn’t pop the bubble then what will…if anything?
Yes the weekend auction clearance rates were down, buyers are nervous about the uncertain financial markets and we have seen a slowdown in enquiries. Yes the Commonwealth Bank move to increase rates above the Reserve Bank level was cheeky.
But now, by all accounts, we have returned to the normal cycle of ‘rise and fall’ rather than ‘boom and bust’.
For borrowers the prospect of new rules on mortgage exit fees should make it easier to switch lenders and so hopefully ease some concerns about being ‘locked in’ to an unsatisfactory financial arrangement.
Also buyers should recognise that the housing shortage in Sydney will not disappear overnight. Residential vacancy rates fell to their lowest levels in 12 months in Sydney during September, down to 1.2 per cent. That’s good news for rental returns.
For Morton & Morton our focus continues to be understanding the pressures and price points of the buyers we have coming through the door. By matching the right buyer to the right property the only bubbles we expect to see burst are the ones in the celebratory bottle of champagne!