Is this a turning point for property?

Graeme Salt

This week may well be a turning point, when house price rises started to calm down and homes became more affordable.


 


For someone looking to buy a home, it is certainly tougher this week than it was before. This is for two reasons:


1. The banks have tightened their lending criteria (probably due to prompting from the regulator); and


2  Many banks have increased their fixed rate loans.


 


As a result, for many this is probably the time to either:


 • Lock in fixed rates before they go further; or


• Take chances with variable rates (especially as many economists are predicting a further cut in variable rates in 2014).


 


However, while fixed loans may be slightly higher, homes may well become more affordable. Although we are hearing lots of panic talk about a property bubble Glenn Stevens the Governor of the Reserve Bank said “it has been a little too early to signal great concern."


 


Slowly we could be seeing changes that will make property more affordable. According to RP Data 54 per cent of Australians think it is a good time to sell a property - a year ago it was 29 per cent.


 


This optimism was echoed by SQM Research which revealed that the level of residential property listings around the nation rose during October, with national stock levels increasing by 1.5 per cent. And a city-by-city break down reveals that both Canberra and Sydney experienced a surge in stock during October, with for sale listings increasing by 5.9 per cent and 4.7 per cent respectively.


 


And there are early indicators that developers are producing more homes, confident that they will sell. This is also something that the Governor Stevens identified when he said "The pace of new dwelling construction is starting to respond to higher prices in the established property market, as we need it to.”


 


Graeme Salt is a Sydney-based mortgage broker.  He can be contacted on 02 9922 5055