An industry heavyweight has suggested the Reserve Bank of Australia’s (RBA) latest cash rate call, combined with low stock levels, could incite increased market action.
LJ Hooker Group’s head of research, Mathew Tiller, believes decreased listings volumes — down 15 per cent on 12 months ago — according to CoreLogic, combined with the RBA’s highly criticised 10th consecutive cash rate increase, could establish a competitive environment conducive to increase sales activity, particularly among downsizers.
Despite shifting market conditions previously holding sellers back from listing their property, a positive start to the property market’s year has increased open home attendances and auction clearance rates consistently sitting above 60 per cent could provide motivation for certain sellers.
“Vendor expectations have become more realistic and more people are willing to meet the market,” Mr Tiller said.
Conceding strong unemployment and wage growth mean many home owners are “content to sit out of the current market and put their plans to move on hold,” he outlined, “there are those who may be contemplating downsizing their mortgage or looking for something more affordable.”
“This could be the right motivation,” Mr Tiller added.
Moreover, a current lack of housing choice is “putting pressure on buyers,” therefore “helping to lift prices in some areas.”
Despite noting “buyer competition is currently a long way from the ‘FOMO’ levels experienced in 2021,” Mr Tiller believes current levels are “definitely higher than the end of last year.”
While ever-increasing rents, which soared a record 10.2 per cent in 2022, are reportedly piquing the interest of investors, a mass return to the market is dependent on whether they are able to manage higher interest rates.
On the rental front, Mr Tiller explained, “tenants who are in a position to buy will be trying to get out of the rental market, and this will also add to the pool of active purchasers throughout autumn.”
Even with the presence of the looming fixed-rate cliff hanging over the heads of as many as 800,000 Australians breeding uncertainty within certain factions of the sector, Mr Tiller explained the market would be able to cope with rising listings, whether they’re born from people exiting their mortgages or normal seasonal increases.
Facing increased economic headwinds, he stated “people are working through their financial situation now either by talking with their bank or finding another lender.”
Mr Tiller concluded that it’s increasingly likely “banks will be doing everything they can to keep the mortgage holder as a customer and will be more willing to renegotiate or provide a repayment holiday rather than repossessing a home.”