Did You Hear the Bell?

Graeme Salt

“No-one rings a bell when the market hits the top” goes the old anecdote. I have not heard a bell. But, increasingly, experts reckon the property market has peaked.


 


Over the past 12 months, Sydney has been the powerhouse of the country’s property market.  But Residex believes our biggest city has reached the top – and that many other cities will follow suit. 


 


Anecdotal evidence backs this up. According to the Sydney Morning Herald “The general consensus among agents at a decent sample of properties around the inner-city was that the market was cooling, with the peak of this year’s hot property market a couple of weeks ago.”


 


This week, the Reserve Bank also pointed out in its Financial Stability Review that "It is important for investors and owner-occupiers to understand that a cyclical upswing in housing prices when interest rates are low cannot continue indefinitely and they should therefore account for this in their purchasing decisions."


 


Sydney real estate agent, Ewan Morton recently said, “Yes prices can rise and fall but the current strong market can be maintained as long as we all don’t get too carried away. Buyers need to act with caution and borrow to invest responsibly. Vendors need to maintain realistic price expectations on the back of that level of buyer caution. Be sensible not sensationalist. Don’t aim for a boom and we can avoid the bust.”


 


There is now a lot of stock on the market and consumer confidence has dipped with the various job cuts that have been announced. But does that mean that we are all doomed and prices will be dropping? I doubt it.


 


I have long reiterated that the property market is determined by the laws of supply and demand. Right now, supply is high and demand seems to be peaking. If the above is true, this may well be a good time for buyers. Interest rates are low and there is less competition for property.


 


Graeme is a Sydney-based mortgage broker.  For a no-obligations consultation, he can be contacted on 02 9922 5055

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