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If I Am Considering Selling, Why Go To Market Now?

By Rachel Wallace

Australia’s housing market is now well entrenched in one of the strongest growth phases on record. CoreLogic says the disconnect between buyer demand and low stock has fuelled the surge in values, probably more than low interest rates. March saw the end of JobKeeper, the rental moratorium and the expiration of the mortgage deferral program. We are waiting to see if regulators step in with macroprudential controls. There are some headwinds ahead in the form of a reduction in fiscal support from the federal government, home loan deferral arrangements expiring and migration remaining stalled.

Buyer demand is still outpacing new stock additions. Demand is expected to remain strongest from first-time buyers and upgraders, many of whom are spending money on a house they might otherwise have used on overseas holidays. Australia’s top bankers and chief regulator are adamant rapidly rising house prices are not seeding financial risks that warrant lending curbs, but have signalled borrowers’ incomes will be a key indicator for taking future action. Surging house prices in New Zealand have forced its government to introduce tough curbs through taxation and lending limits. But in Australia, which record the fastest house price growth in 32 years in March alone, regulators are waiting to see the effect on incomes from the wind-up of record government wage subsidies, cash boosts and $10 billion in bank interest payment deferrals.

Australian Prudential Regulation Authority chairman Wayne Byres said that while certain risks were rising there was no need for intervention just yet. “We are alert to signs that very low interest rates and rising housing prices create a dynamic in which households seek to take on even higher debt levels, and that banks searching for credit growth seek to accommodate that demand through greater risk taking,” Mr Byres told The Australian Financial Review Banking Summit.

Westpac chief executive Peter King said he did not think record low interest rates and growing household debt were contributing to house price growth. Instead, he blamed an imbalance in supply and demand. “I don’t think big bank debt is a driver of house prices,” Mr King said. “If I look at what’s happening in housing debt, there is growth, but it’s not like it’s investor or interest- only led, which [it was] the last time we saw big house prices. I think it’s a fundamental supply-and-demand issue,” he said. Westpac recently upgraded its residential property growth forecasts to indicate that nationwide home prices could rise 20 per cent over the next two years.

As always we remind you the future remains uncertain for many reasons:

  • The international border remains shut to everywhere now except New Zealand
  • The number of properties for sale will increase over 2021 which creates more choice for buyers.

What we do know is that market fundamentals right now are helping our clients who are looking to sell. Our data tells us that our sellers who choose to sell via the auction method are rewarded with almost 12 per cent higher price under the hammer than if they’d accepted a prior offer. We cleared 82 per cent of all auction stock last month, with record numbers of registered bidders. There’s a deep buyer pool for sellers to take advantage of right now. Our question remains, “What are you waiting for?”

Source: raywhite.com

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