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The recent hike by the Reserve Bank of Australia (RBA) is changing the sails of the housing market and it might be on its way to favour buyers, particularly investors.<\/p>\n
Wealthi co-founder Peter Esho said the residential real estate market has now completely shifted to a buyers\u2019 market.<\/p>\n
\u201cWe think the market is shifting to a buyers\u2019 market because property price growth has slowed and vendors who need to sell due to rising interest costs are coming to market,\u201d he told Your Investment Property.<\/p>\n
Home prices marked their first drop since the start of the pandemic<\/a>, down by 0.11% in May, according to PropTrack\u2019s latest Home Price Index.<\/p>\n \u201cI’d go one step further and say the market is shifting not only from a sellers\u2019 market to a buyers\u2019 market, but also from an owner-occupied market into an investor market.\u201d<\/p>\n Mr Esho said the low unemployment rate, backed by the robust economy and rising rental returns will continue to entice savvy investors who have been on the sideline waiting for an opportunity to buy.<\/p>\n \u201cWe’re seeing savvy investors move into the market, particularly in inner city locations where the rental market will benefit from rising inflation through higher rents,\u201d he said.<\/p>\n PRD Real Estate<\/a> recently released a study showing that the current conditions of rental markets in the Gold Coast, Brisbane, Sydney, and Melbourne are becoming ideal for property investors.<\/p>\n CoreLogic research director Tim Lawless said further increases in mortgage rates and the rising costs of goods are a double whammy for indebted households.<\/p>\n \u201cHigher costs for food, fuel and finance are likely to see household savings continue to taper as families funnel more of their income towards servicing their mortgage and funding essential costs of living,\u201d he said.<\/p>\n \u201cWhile higher interest rates will lower borrowing capacity, less household savings and tighter balance sheets will also weigh on serviceability assessments for prospective borrowers, adding to diminished demand for home purchases.\u201d<\/p>\n The lower sales during the three-month period ending in May and the recent decline in mortgage commitments<\/a> are some of the impacts of the higher interest rates, which have already lowered borrowing capacity.<\/p>\n Mr Lawless said the higher mortgage rates add further downside risk to dwelling values, which are already falling particularly in Sydney and Melbourne.<\/p>\n \u201cHome values were already easing well ahead of a rising cash rate \u2014 A combination of higher fixed mortgage rates, lower consumer sentiment, tighter credit conditions and worsening affordability have all played a role in the slowdown to-date,\u201d he said.<\/p>\n Mr Lawless said the stronger economy and the tight labour conditions should help ensure an \u201corderly\u201d downturn in the housing market.<\/p>\n \u201cWhile we expect the housing downturn evident in Sydney and Melbourne will gradually spread to other regions, the trajectory for this will depend on how fast and how high interest rates move and normalise, along with the performance of the broader Australian economy and labour market,\u201d he said.<\/p>\n \u2014<\/p>\n Photo by @adeolueletu on Unsplash.<\/p>\n<\/p><\/div>\n
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