The property market is cooling. As detailed in last week’s post, it is unlikely to fall out of bed. Whilst debate rages over the impact of foreign buyers on our property market, their participation has a clear influence at the coal-face of selling real estate in a number of the major cities in Australia; certainly in Melbourne and Sydney. Recent tax hikes and changes to lending practices are starting to flow through to diminishing activity from Chinese purchasers in particular.
Property prices run in cycles and our reading is that we have reached the top of the current cycle. Does this mean that prices will now drop? No, but they may do so if the reaction to recent policy changes continues to dissuade more and more investors and foreign buyers to withdraw from the market. This outcome may well be welcomed by many and indeed a modest decline wouldn’t do any harm. A significant price drop would not be without a cost to the wider economy though. It would impact growth, confidence and mortgage stress. Not ideal.
For the record, we don’t expect this to occur though and have evidenced this by two members of our sales team having made upgrade home purchases in the last two months, with another currently investigating possible buying options for his first home. The right time to buy is when you are financially able to do so. Nobody, even valuers, agents and bankers, can perfectly time the market.