The Real Estate Rollercoaster
The real estate market is rarely stable for long. I have been in the valuation and real estate sales business for some 50 years and have seen the roller coaster of major market fluctuations at least 5 times.In my experience, what goes down, goes back up - and then some.
The real estate market is motivated by many different factors, the most common being Supply & Demand and the Economic Environment.
Supply & Demand
A combination of population growth through births and immigration is outstripping the provision of a suitable level of housing stock, which has contributed to upward pressure on house prices being experienced across the board in Hobart.
A secondary factor impacting the local market has been the exodus of “sea changers” from the mainland seeking the lifestyle Tasmania offers. In addition, the market continues to be fuelled by the baby boomer cohort, who downsize without the need to borrow.
The Economic Environment
The Reserve Bank’s tightening of credit supply guidelines and the increase in interest rates (1.5%), which the retail banks have passed on to customers, has resulted in taking the heat out of the market to some extent.
This manifests clearly by pushing out the time it’s taking to sell and is also showing through in a softening of the prices being paid. At this stage, some real estate research companies are pointing to a price softening of between 3% and 10%.
I see it as more of a cooling in sentiment, with a realisation that the times are a changing and the endless summers of price rises was becoming unsustainable. At least for the moment!
What does this mean for buyers and sellers?
What of the future? The good news is that the Reserve Bank is suggesting that while interest rates may continue to rise in the short term, economic conditions will ease the pressure on rates over the next 12 months.
I believe that demand will remain at similar levels in the short-term, particularly over the rest of winter; stock levels will rise slightly as spring approaches; and buyers will become more comfortable with the changed lending rates, resulting in a less frenzied marketplace.
It is helpful to remember that just three years ago, pre-Covid, interest rates were well above current levels. In conclusion, the market and prices will remain fairly stable in the short term, and new buyers will not be in for any big surprises.
If you want to know how your property may have been impacted by the current market, contact Mark today.
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Mark Lawler
