Market Update Autumn 2019


Bringing you the latest news from the property market.

By now you’ve most likely heard about the current state of the real estate market. However, you may still be wondering how this downturn has come about, and what it means if you’re considering a move.

One of the most important factors determining property prices is credit availability. The majority of home buyers – both owner occupiers and investors alike – rely heavily on mortgage debt for their purchases. Lending standards have been tightened, first by the banking regulator (with a focus on investors), then by ASIC and the banking royal commission enforcing responsible lending laws, especially in relation to loan applicant’s living expenses. With buyers finding it harder to borrow and banks lending less, this has had a flow-on effect on property prices. However, enforcing tighter lending standards is not the only thing responsible for the current market decline. The bank regulators’ efforts to rein in property investment, though now somewhat relaxed, has reduced a key source of demand in the market which is unlikely to rebound any time soon given proposed restrictions to negative gearing and reductions of capital gains tax discounts. Foreign investment has also decreased due to tougher enforcement of investment rules and increased taxes on overseas buyers. The current downturn also seems to be feeding on itself – with economists and the media predicting further price falls. Most buyers have simply lost their urgency to purchase, resulting in properties taking longer to sell and thus creating an oversupply of properties. This lack of demand coupled with excess supply and reduced buyer borrowing capacity has created one of the most challenging markets in Australia’s history for sellers.

The silver lining to this market correction is that lower prices and low interest rates are great news for first home buyers and those who are buying and selling in the same market, especially those upsizing – who will often save more now on the changeover figure. If you’re considering buying or selling, an experienced real estate agent’s help and advice is more important than ever. Please feel free to get in touch!