Spring selling season faces mixed outlook amid economic challenges
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The upcoming spring selling season may not bring the usual surge in property prices, according to Compare the Market Property Expert Andrew Winter.
High interest rates and economic uncertainty are expected to constrain borrowing power and temper seller expectations across Australia.
Mr Winter said conditions have been difficult for home buyers this year due to low supply and high demand.
“Conditions have been tough for home buyers this year with short supply and high demand creating an overheated, overcrowded marker,” he said.
However, he noted that asking prices have started to soften in some capital cities.
“We’ve started to see the steam coming off asking prices in some of the capitals including Sydney and Melbourne as sellers adjust their expectations in line with buyers’ reduced borrowing capacity,” Mr Winter said.
SQM Research data shows asking prices in capital cities dropped 0.5% in July, with Sydney experiencing the largest decline of 1.3% for house listings.
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Mr Winter predicts an increase in new listings as sellers emerge from “winter hibernation”.
This could present opportunities for buyers who have been constrained by rising prices and reduced borrowing power over the past two years.
Compare the Market figures reveal that some people’s borrowing capacity has decreased by up to $292,000 since interest rates began rising in May 2022.
The impact of higher interest rates is also being felt by current homeowners.
SQM Research reported 5,111 homes were sold under distressed conditions in Australia in June, a 0.2% monthly increase.
Mr Winter advised new buyers to carefully assess their ability to manage mortgage repayments, as higher interest rates may persist longer than anticipated.
“The cost of borrowing has gone through the roof and that impacts the market in all sorts of ways,” he said.
He cautioned against trying to time the market based on potential rate cuts or price drops.
“If you’ve found a property you like and you’re in the position to be able to buy, try not to worry about what prices will do in the short term,” Mr Winter said.
Instead, he emphasised the importance of buying within one’s budget to ensure comfortable repayments.