The busiest time for property sales is finally under way and here's what you should expect from the coming months.
Blogger: Nick Viner, principal, Buyer's Domain
There are three key points you can count on this spring:
1. Fewer investors
The Australian Prudential Regulation Authority (APRA) has put pressure on lenders and financial institutions to cut the discounts available on investment loans, while also changing the loan to value ratios and requiring larger deposits.
At the same time, Sydney’s strong capital gains and weak rental growth have forced rental yields down. The average rental yield on a house in Sydney fell to a weak 3.3% in June. Investors have started chasing higher returns elsewhere.
2. More home buyers
While affordability will continue to be an issue, first home buyers should benefit from subdued investor demand, particularly in areas where there is an availability of cheap apartments.
On the other hand, young families are going to face intense competition from cashed up downsizers within approximately five to seven kilometres of the Sydney CBD.
3. More of the same
Auction clearance rates have dipped over the past month and the market is changing as outlined above. However, it may be wishful thinking to interpret this as the start of a downturn.
The ongoing low interest rates and strengthening demand from home buyers is likely to lead to “reasonably solid price growth” this spring, according to Shane Oliver, chief economist for AMP.