Laws of Supply and Demand Affect Property Prices

Graeme Salt
  • Would you buy a property if your job was on the line?
  • Would you take out a mortgage if you thought you could be retrenched?

 


Recent data may well add a dose of reality to property markets – and offer buying opportunities for those who have been previously outbid at auctions.


 


This week the Australian Bureau of Statistics released its Wage Price figures which showed that wages rose only 0.7 per cent in the December quarter 2013 and 2.6 per cent over the last year. This is the worst result since this data has been collated.


 


Given this, plus the rising unemployment rate, it’s hard to see it not having an impact on property markets. Pretty much every day, there is bad news on the jobs front (Alcoa, Sensis, Forge Group, Toyota) - and this will surely curb buyer enthusiasm.


 


And, for investors, it is certainly not all blue sky. Initial research from SQM indicates that rental vacancies have lifted by 0.3 per cent year-on-year. Much of this is because prospective buyers are leaving the rental market to purchase their own properties, resulting in an elevation of vacancies. As a result, SQM’s weekly vendor sentiment (asking prices) index is down by 1.1 per cent over the past month.


 


Of course, we are still in positive market; the Sydney clearance rate still around 80 per cent – indicating strong buyer demand.


 


And for some, the market is particularly positive. If you are a potential property buyer who has stuck on the sidelines, waiting for the market to calm down, this could be your time.