By Graeme Salt
This week I spoke to a client whose borrowing capacity has been reduced from $480k to $300k.
Granted this client was looking to buy an investment property (and had been relying on negative gearing). But her experience is relevant to us all.
The property market has been primed for a reset for some time.
Many would-be buyers are now sitting on the sidelines waiting for the dust to settle from the budget.
This weekend’s auction clearance rates showed inherent pessimism amongst potential buyers:
| Sydney | 56.9% |
| Melbourne | 60% |
| Brisbane | 45.7% |
| Adelaide | 72% |
While much of this has been precipitated by the Budget, the market has been pessimistic for some time.
We have had
- consecutive rate rises
- plunging consumer confidence
- the threat of Iran-induced inflation
The latest ABS Lending Indicators reflect this shift showing weaker activity than in December last year. The total number of housing loan commitments fell by 6.2 per cent.
All categories of property buyers recorded a quarter-on-quarter decline in lending activity, however owner-occupier lending slowed more significantly than investors. The quarterly volume of owner-occupier loans fell by 6.9 per cent, while the volume of investor lending was 5.3 per cent lower.
Is it wide to stand on side?
There’s little optimism in the market right now – and that normally presages price drops.
But sometimes, buyers can wait-and-wait and miss a golden opportunity.
Today I was communicating with a buyers’ agent whose client bought a property for $3.6m after it was first offered for $4.2m.
Buying opportunities are likely to arise. Sometimes if you wait too long, you may lose out.
If you want to talk more about property and finance, please feel free to contact me on 02 9922 5055
