IS THE PROPERTY MARKET GOING TO CRASH?
The biggest fear for property owners right now is that the market is going to crash.
Sure, buyer demand is falling across the country, but not in all states and not in all suburbs.
It would be easy to blame interest rate hikes for the reason buyer demand has slowed, however fear and panic about a property market crash, spurred on by the media, could also be a huge contributor.
What you may find extremely interesting is that:
with falling consumer confidence
the fear of a ‘property crash’
increased rental costs
the RBA trying hold inflation to a normalised 2-3% target
Aussies are still spending rather than saving.
ANZ-observed spending (except for petrol) in August was steady and showing a similar pattern to previous years.
Furniture sales were up (22%)
Travel agent spending has doubled since February – a record since
COVID.
There was a weakness in entertainment, clothing and accommodation spending.
Dining, department store and electronics spending all showed the same seasonal patterns as pre COVID.
So why are we still spending on discretionary items but not on property?
Potential buyers are holding back waiting to see if the market does in fact crash although there are very good signs that property will hold its value over time.
If we take a walk down the historical path of interest rate rises and look at the last time interest rates increased rapidly (2009-2010) – the largest in modern history – it was followed with a series of interest rate reductions over the following eight years until we hit the lowest interest rates ever.
There were NO crashes and property prices kept rising (especially in Sydney and Melbourne).
The only way you will be impacted is if you have to sell your home because you can’t manage your repayments. However, most homeowners have a buffer and can sit tight until consumer sentiment turns positive again. There are currently some great incentives for homeowners to consider swapping lenders. Make sure you contact us for more details.
When interest rates stop rising and we observe there is no crash…
Supply and demand will pick up again, as will consumer sentiment, and no doubt property prices.
So make sure you stay updated via our industry updates and feel free to share with a friend.
Reach out if you think we can help in any way.
If you'd like help with assessing your personal and financial situation, as well as comparing the loans in the market to see if you're truly getting the right deal for you, then call Bob Malpass now on 0431 862 136, email [email protected]
Thanks for reading
Bob
Sources
1. propertyupdate.com.au/rising-interest-rates-isnt-slowing-discretionary-spending
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