Interesting Changes in the Mix!
Some interesting statistics are starting to emerge in the sale market between the mix of investor listings and those of home-owner occupiers. A number of areas, including 4 or 5 in Sydney, are indicating that the share of investor owned “new listings” to the market has increased by as much as 10% above the long-term averages. Several regions have more than 40% of new stock being reported as investor originated sales, with one Sydney suburb reporting more than 50%!
Based on an average interest rate and national median dwelling value, mortgage costs have risen over $800 per week. In Sydney this will be even higher and although rents have also increased, it has generally not been enough to keep pace with mortgage cost increases amongst other inflationary pressures. As the interest burden becomes too high for some investors, there may not be too many options left but to offload the investment.
The ability of buyers to borrow money in a rising rate market coupled with increased serviceability requirements will no doubt shrink borrowing capacity for many. This may well influence those buyers currently looking to enter the market and, of course, for those property owners coming to the end of fixed term interest rate loans who are looking to arrange re-financing. Several banks have indicated a lowering of serviceability “buffers” from 3% to around 1% for existing borrowers looking to refinance.
The overall short supply of available property for sale, signs of a downturn in the building industry and rising levels of immigration should ensure prices remain reasonably resilient to these other factors in the short term at least.
