Here Come the Homebuyers?

Graeme Salt

The Reserve Bank produced some interesting property statistics this week, which confirmed three key trends:



 



1. Markets may be peaking



2. This ‘bubble’ was not as strong as previous growth periods



3. Growth was mainly confined to Melbourne and Sydney



 



In its statement the RBA said, “Nationwide housing prices increased by around two per cent over the three months to October. This is slower than the rapid pace observed in late 2013, but faster than recent growth in household income."





Looking at the RBA’s graph it would appear that it has concluded that price growth has come off a bit. Indeed, this weekend, Sydney’s auction clearance rate dropped to a four-month low of 75.5 per cent, according to the Domain Group.



 



Much of the price growth of the past couple of years has been driven by investors rather than owner-occupiers. But, in some cities prices are so far out of sync with rents, that new landlords are only achieving rental yields as low as 3.2 per cent. Investors are now likely to be chasing better yields by putting their elsewhere.



 



But we are far from a ‘sell, sell, sell’ moment. Over the past years, these investors have crowded out many other would-be property buyers. I have a long line of clients, often looking for a family home, who have opted out of purchasing until things calm down.



 



It is likely that, as things calm down, other buyers (including homeowners) will fill the gaps left by investors. Recently, the Domain Group’s senior economist said that property was likely to be “flat as a pancake” for the next decade.



 



Maybe we won’t get stellar growth, but this also tells us that prices won’t go down either. For many, this is a good time to buy a home.



 



Graeme Salt is a mortgage broker with offices in Melbourne and Sydney.  for a no obligations consultation, please contact him on 1300 30 67 67