Mark Mcleod - As always, buyer sentiment is heavily influenced by the combination of local area market conditions and the overall macroeconomic environment. While the media was full of pre-election news, buyers did not appear to be overly concerned about the outcome, with activity levels remaining constant in many areas. The release of the Reserve Bank’s (RBA) board meeting minutes last week indicated that the official cash rate is likely to remain low for some time. While refusing to rule out the possibility of further cuts, a pre-election cut in early September is highly unlikely, with the board instead taking a longer term view. The Sydney Morning Herald (SMH) reported Kirk Cheesman, managing director of National Credit Insurance Brokers, says the latest data points to the country being already in a borderline recession, with the retail and building industries suffering the most. Another source said the big end of town is in trouble with city law firms and accountants feeling the lack of major merger and acquisition work. Meanwhile, a separate SMH article said analysts are debating whether the east coast of Australia is on the verge of a property boom, with high auction clearance rates in Melbourne and Sydney also leading to talk of overheated markets and a possible property bubble. According to the latest finalised auction results from researcher RP Data, the clearance rate in Sydney was 77%, Melbourne 69%, Brisbane 49% and Adelaide 75%. Volumes in other capital cities were too low to yield meaningful averages. Property Observer reported veteran financial journalist Robert Gottliebsen as saying the RBA has told big banks a housing price boom is currently its biggest fear, as it would force them to raise interest rates. Gottliebsen wrote in Business Spectator the banks are fanning demand by encouraging people to buy property with generous credit and low interest rates. Michael Matusik wrote of the five year RP Data study which shows early offers on properties are usually the best, with peak buyer activity seen in the first 30 days. The study revealed that homes sold within 30 days had the least amount of vendor discounting at -3.9%, while properties on the market for more than 120 days were discounted the most at -10.1%. With just days until the end of winter and a rush of new properties expected to enter the market for spring, we encourage all sellers to carefully review the activity around their properties this week in light of the current environment.
Posted on: Mon, 26 Aug 2013 00:47:43 +0000
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