Records are still being set for property prices in Melbourne. There is still a pool of buyers waiting for new listings to come onto the market. This excess demand is working in favor of sellers and prices are still creeping up. But the slowdown in price growth may be closer than many think.
A number of factors are lining up that will impact prices. APRA, the authority that regulates lending institutions, has fired the first salvo to slow lending down; new rules started on 1st November to reduce lending capacity. Next, interest rates are now broadly accepted as having bottomed out, with rates expected to start increasing later next year. This is a significant change in the expectation of no changes until 2024. Additionally, new listings are now quickly hitting the market.
The invisible factor is the depth of the pool of buyers. It’s only really agents that get to see that. Some properties attract a lot of buyers still. So called “bread and butter” properties; typical for the area and what many are looking for. Also, both (relatively) affordable and broadly appealing properties. But there are many “unique” or special properties that are now only attracting genuine interest from one or two buyers. When that sells, there may be just one or no buyers left actively looking for a home like that.
For this reason, the anticipated slowdown in price growth may well occur sooner than most expect. Potentially the new year could see a mood shift. The lack of depth compared to just weeks and months ago is starting to show. Combine this with the pause that Christmas brings, and the new year may be a new market. If not, APRA has made it clear that they are willing to act again to slow things down. One way or another, next year will be a very different property market.