Spring is traditionally a good time for the property business. The same may not be exactly true with house and land, but this year has been quite something.
Kenekt is a house and land marketing tool that creates personalised marketing material as you create a stock list in the system. We depend on the $75 Bil market locally to sell our wares.
Spring is traditionally a time to sneak in and see how much your neighbour's house is selling for. Or to pick up your phone on Saturdays and see that your wife has booked four appointments when all you wanted to do was hit the beach and soak in some sun. I am sure you have noticed that the buzz is missing this year.
Property prices are falling. We all know that. But they are still about 15% above pre-pandemic levels across the country. That’s a good thing, isn’t it?
Property prices fell by 1.4% in Sept, says CoreLogic. There have been slight improvements over August when it was -1.6%. Sydney property values fell by 1.8%
That should mean little for house and land. But the problem is affordability, and it's across the board, proven by the fact that apartment prices have fallen less than houses: 0.7% in Sept compared to 1.5% for houses. The future of rate rises is unclear, and even if people can afford an investment at the moment - and house and land is an investor-heavy market - they are not. There have been seven rate rises so far. Some remember the rates in the ‘90s or their parents complaining about them. Banks are predicting RBA’s rate rise to a peak in 2023 at around 3%. RBAs rate increase in Oct has been less than what was expected, though. RBA increased rates by 25 basis points again in Nov that means the cash rate is at 2.85%.
Land sales in the city’s fringes are plummeting. Buyers buying in these suburbs are very susceptible to interest rates and financial pressures. Number of lots sold in Sydney has dropped from 800 to 250 a month, says Research4 data! However, the price of land has managed to hold steady. The median lot price in greater Sydney, which is about 45% of Sydney’s median house price, is now at around 62%, indicating house prices have declined faster.
Developers are starting to offer 350 m2 blocks in the hope that lower prices will entice buyers. Buyers face increased construction costs, the rising cost of living, reduced borrowing power and higher mortgage repayments.
Many builders are starting to consolidate their positions and strengthen their balance sheets - by laying off staff and reducing costs to weather the storm.
Perhaps the worst is over the people will embrace the new normal and return to the market. Until then, we, as with any house and land business in Sydney, will have to struggle through.