Supply and demand always play a major part in how prices move. However, add the lowest interest rates in recorded history, unprecedented Government support for home buyers, renovators, builders and developers and you have an incredible environment for real estate prices to go crazy.
In many parts of the country, COVID has caused a massive shortage of homes for sale with many home sellers removing their property from the market due to concerns of having potentially infected people come through open homes or because so many areas were in lockdown that many potential buyers could not leave their homes to even inspect others.
The result has been that with the buyer demand still in place, and with fewer homes for sale, prices escalated well beyond what market predictions were suggesting however, now that the major markets of Sydney and Melbourne have opened up, homes for sale have increased week on week for over two months and the number of homes for sale over this time last year has increased also.
Not such a great sign for home sellers, as anything that was put onto the market in the last few months, from the worst house in the area to the ugliest, was snapped up quickly and now competition between sellers is starting to emerge. It’s certainly not a buyers’ market yet and the momentum experienced by sellers is only just starting to slow down, but we can say with some confidence that the opportunity for buyers and sellers to negotiate a sale in a less frenzied manner is fast approaching.
I don’t subscribe to a market crash as major banks for some time, have been approving home borrowers at a far higher interest rate than they are currently paying to ensure that when, and not if interest rates rise, these borrowers will be well equipped to cope. This will not be the case for everyone as buyers over the last few months may have paid more than they were expecting for a home and should they need to sell in the near future, chances of getting any gain from this crazy market are getting slimmer by the day and in fact capital losses may occur.
The good news, I know some will not believe there will ever be any, is that supply and demand have certainly began to head in the direction that favours a balanced and less frenzied time, with days on market for homes for sale beginning to expand, and banks and other regulatory bodies stepping in, always after the fact of course, to save the day!
It should be remembered that we are generally only ever in two types of real estate markets. One where you feel you need to go up to a sellers ridiculously high price and that’s called a BOOM and the other where the sellers think your offer is ridiculously low and that is what we call REAL ESTATE which we are generally in ninety percent of the time!
Some parts of Australia, those that generally started off in a lower price bracket than Sydney and Melbourne, are still moving well as a runoff from the major markets however as previously mentioned, stock levels are rising across the country and with talk of interest rate movement occurring in the foreseeable future, auction clearance rates dropping every week for the last two months, all indications are that we will start off the new year with a much less frenzied marketplace in most parts of the country than we have seen for a long time.
