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The start to the year has been strong in terms of the sales volume, considerable buyer activity and the recalibration between seller and buyer’s price expectations, according to The Agency CEO Matt Lahood.
Across Australia, it continues to be a market of highs and lows, he said in his Autumn 2019 Property Report, adding that records are being broken in some suburbs while in others values have been hard hit.
“Over my 30 years in real estate, the two key levers I have observed [that] affect property prices have been the rate of employment and interest rate levels, but today we are seeing a third lever, that of tighter lending criteria,” he said.
“Interest rates are at record lows and unemployment is at the lowest rate since June 2011, at 4.9 per cent February this year, according to the Australian Bureau of Statistics. But it is the buyer’s ability to obtain finance and uncertainty around property valuations in the current market, that we are seeing impact prices.”
Mr Lahood said the banks have been running scared.
“Post the financial services royal commission, the big four banks have cited the commission’s recommendations as a contributing factor in the credit squeeze, in particular ANZ CEO Shayne Elliott and NAB’s incoming chairman, Philip Chronican.
“In response, ASIC chairman James Shipton refuted these claims, stating the responsible lending laws have been in place for more than a decade.”
But Mr Lahood said that, while the financial services regulatory bodies, ASIC and APRA, and the major banks work their way through to a “balanced” lending approach, the property market will continue to be affected.
“As reported by CoreLogic, national dwelling values dropped by 0.6 [of a percentage point] in March, which is a 7.4 per cent decline since the property market’s peak in October 2017. To put this in perspective though, most home owners are still in a strong equity position.
“Despite the decline over the last year and a half, national dwelling values still sit 15.9 per cent higher than they did five years ago.”
Mr Lahood said the property market has always been cyclical and should never be viewed as a short-term investment.
“CoreLogic’s head of research, Tim Lawless, has also noted that the rate of property value decline has slowed in 2019 from its height in December 2018, when home prices fell by 1.3 per cent across the capital cities.
“In fact, the rate of home value decline across the nation has slowed again in March; 0.6 [of a percentage point] is the smallest decline since October 2018 when values fell by 0.5 [of a percentage point].”
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