2014 has seen the Sydney property market break some spectacular records when it came to property prices. Every time it seemed that the real estate bubble was about to burst, another record was broken and the market bobbed along even more buoyantly.
Part of the problem with a buoyant market is the level of vendor expectation. As continued reports of high auction clearance rates and top prices being recorded for surprising properties, the expectation of a spectacular sale price becomes part of the expectation for vendors. As the market begins to correct itself in line with economic growth, there is a disconnect between the more realistic value of property and the vendor’s expectation.
Despite the hedonistic nation wide ‘Super Saturday’ results of two weeks ago, once again the experts are warning of a slow down and it appears that the pull of gravity may finally be strong enough to slow the market down and bring prices back in line with other key factors such as economic growth. The employment rate has dropped and consumer and investor confidence has slowed, meaning that, despite consistently low lending rates, the housing market’s rise has slowed.
The main factors in the slow-down are:
Low employment:
Lower employment rates and fewer salary increases has led to a drop in buyer confidence. In 2014, loans for investment property overtook loans taken out for first home buyers.
High prices:
While the record breaking prices are a boon for vendors, they effectively price a lot of potential buyers out of the market which eventually lowers the overall buoyancy as there are less and less buyers at the top end of the market.
Mortgage rate uncertainty:
Logically, for as long as mortgage rates remain so low, the property market will be more attractive to more consumers, thus creating the rising prices and large numbers of listings. Given the number of years the rates have been so accessible, many are predicting they will rise, if only to create a market correction.
Whether you are buying or selling, a buyers agent can help you find great value no matter what the prices are in the property market. Call Amanda on My Side today for more information.
