A major network has acknowledged that the latest rate decision from the RBA will have a knock-on effect on the traditional spring selling season.
LJ Hooker Group believes that the latest interest rate rise is unlikely to bring a rush of listings in Sydney and Melbourne especially — and could even mean that fewer properties do hit the market this spring.
It’s not all doom and gloom, though, with the group’s head of research Mathew Tiller expressing that while there will “probably” be a lower level of listings this year, there will still be more stock coming.
This could be fuelled by anecdotal evidence from the network’s agents to suggest that the nearness of spring is already leading to increasing numbers at open inspections — despite buyers oft displaying caution against overspending, and with many reporting a stricter budget than they have previously. Incentives for first home buyers and a return of investors will likely also keep the end-year market busy.
“We are transitioning into a buyer’s market, which could mean people will be a little more reluctant to sell,” he began.
“Some vendors may think that there is more downside in terms of price reduction to come and will want to get ahead of the curve, but there won’t be a mass sell-off due to interest rates even with the current pressure on household budgets.”
The head of research expects that the cash rate will reach 3 per cent by the time the RBA concludes its current cycle of increases, which looks set to continue through to early or mid-2023.
That expectation comes as CoreLogic has revealed widespread price declines across Sydney and Melbourne, with Brisbane also dipping into a decline for the first time since 2020.
Despite this, Perth, Adelaide and Darwin markets have continued to experience growth, leading Mr Tiller to reflect that interest rates haven’t impacted the nation consistently: “Each market has its own micro-factors in play with different levels of stock and buyer demand.”
Explaining further, the researcher said: “We are seeing Sydney and Melbourne prices slow down more than other capital cities because they are the most unaffordable markets — higher prices mean higher mortgages and household debts which makes it more susceptible to changes in interest rates.”
Even as financial pain begins to bite, Mr Tiller doesn’t see it as purely an issue for the RBA, considering that in instances where people are forced to sell, “it won’t be because of interest rates alone but due to a combination of the overall costs of living putting too much pressure on household budgets”.