Mortgage holders feeling the strain of higher cost of living and rising interest rates are more likely to downsize than opt out of the property market completely, according to the LJ Hooker Group.
The Reserve Bank of Australia’s decision to lift interest rates today for the seventh consecutive month (up 25 basis point to 2.85%), however, is not expected to cause any significant changes to the current conditions.
LJ Hooker Group’s Head of Research, Mathew Tiller, said sales transaction numbers remain above long-term average levels and elevated auction clearance rates shows buyers remain active.
Homeowners looking to reduce their debt could be tempted by recent results to sell and ‘downsize’ the size of their mortgage.
“We don’t expect to see a large wave of listings, before the end of the year, given employment markets are strong and everyone has been pencilling higher interest rates into their household budget, so today’s announcement won’t be a surprise,” Mr Tiller said.
In Sydney, clearance rates have hovered around the 60 per cent mark for the past month, according to recent CoreLogic figures. Mr Tiller said this shows property is still transacting with a base level of demand keeping the market ticking over.
The slower pace and lower number of new listings also reduces the likelihood of a ‘major’ price reduction.
“After such a strong period of high turnover, a more ‘normal’ rate of activity feels very slow but sales remain above the long-term average,” he said.
“Vendors who have the flexible price expectations, rather than setting a price based on what was being achieved a year ago, are doing quite well.
“Those who have been outpriced from the market over the past 18-months have been sitting on the sidelines. These buyers are seeing good value at the moment and purchasing if they are in a position to do so.”
Homeowners only have a short window to sell their property before the end of the year. Median days on market is currently 35 days. To sell before Christmas, properties need to be listed and open for inspection by November 19. Those hoping for a six-week settlement will need to list as soon as possible and to also exchange by this date.
LJ Hooker has seen the number of property appraisals increase over the past six months as homeowners do their research and plan their next move. Appraisals have risen three per cent during the third quarter of 2022, in comparison to the same time last year.
“New listings coming onto the overall market for sale are currently about 17 per cent lower than this time last year, meaning it has been a very slow start to spring,” Mr Tiller said.
“There is no sign there will be a big surge in listings leading up to the end of the year, meaning those who are looking to sell will have a ‘captive audience’.”
