\n
![](\"https:\/\/www.apimagazine.com.au\/media\/1001715\/shutterstock_1470367544-terrace.jpg\")
<\/p>\n [ad_1]
\n<\/p>\n
There\u2019s plenty on the horizon to reinforce the fact that in real estate, nothing lasts forever, according to Tim McKibbin, Chief Executive Officer, REINSW.<\/p>\n
In many ways, 2022 kicked off as expected in New South Wales, writes Tim McKibbin, Chief Executive Officer, Real Estate Institute of New South Wales (REINSW) for Australian Property Investor Magazine<\/em>.<\/p>\n The surge in listings we expected in February came to fruition. From late 2021, REINSW members were reporting that a strong wave of new properties would become available early in the new year and these would be met with a heavy weight of demand.<\/p>\n Auction clearance rates are a temperature check of the market and even as volumes increased, clearance rates of 70 per cent-plus were achieved through February. With peak growth having passed, prices returned to a more stable, steady state.<\/p>\n Most vendors are in a comfortable position. Having enjoyed a major uplift through the boom, prices have now settled in a new, elevated place. This settling has resulted in buyers \u2013 those buyers with the means to purchase, that is \u2013 becoming increasingly confident. They\u2019re sticking to their guns and the offers they\u2019re submitting are firm. But they are active in large numbers.<\/p>\n Ultimately, the supply-demand imbalance that has characterised the NSW property market for some time ensured a relatively predictable market through January and February.<\/p>\n And yet, there\u2019s plenty on the horizon to reinforce the fact that in real estate, nothing lasts forever.<\/p>\n Rates and the RBA<\/strong><\/p>\n Interest rates are never far removed from the discussion. More recently, we\u2019ve had economists forecasting a rise as early as June<\/a>. For its part, the Reserve Bank has repeatedly emphasised its willingness to be patient<\/a>. Time will tell, but it appears an upward movement in the cash rate is imminent.<\/p>\n This shouldn\u2019t be a surprise and it\u2019s certainly no cause for panic. Among other things, a rate rise will tell us that the economic recovery is gathering momentum (in no small part thanks to the major role the real estate industry plays) and that the employment outlook is improving.<\/p>\n For the market, it\u2019s reasonable to expect a rate rise will impact property prices with downward pressure. However, prices have moderated anyway. Historically, it has taken multiple cash rate movements to filter through to noticeably impact prices and for some buyers, a mild increase in rates offset by flatter prices might be viewed as a negligible trade-off.<\/p>\n Of course, the demand pool can be divided into two: those with the means to purchase and those for whom a property purchase remains a pipedream.<\/p>\n More affordability misfires<\/strong><\/p>\n For first home buyers, the landscape remains really tough.<\/p>\n In NSW, there are new schemes and taxes in play to apparently help affordability. Regrettably, too often these add to the demand side of the equation.<\/p>\n Demand outweighing supply is the reason for price growth \u2013 it\u2019s economics 101 \u2013 which is why these schemes risk being counterproductive.<\/p>\n The most recent \u2018solution\u2019 is a shared equity plan announced to coincide with the recent by-elections in the state. The premise is that Government contributes to the cost of a first home buyer\u2019s home in return for part ownership of their property.<\/p>\n