The macro view of the market shows a housing downturn underway. Higher interest rates have reduced borrowing capacity, while the Federal Budget has deliberately made investing in established residential property less attractive. Even so, national house prices are unlikely to fall far during this property cycle given the extent to which construction costs have risen. The cost of building a new house is now 51% higher than at the end of 2019 and rose by a further 5.9% over the past year. Existing-home prices can fall while the cost of building continues to rise, but the gap cannot keep widening indefinitely. Once established housing becomes materially cheaper than delivering new supply, projects stop stacking up and buyers are redirected towards existing homes. The latest Cotality Home Value Index shows national house values fell by 0.8% in July and by 2.0% over the three months to July. Despite this, they remain 5.7% higher than a year ago. Regional markets like ours are still outperforming the capitals on an annual basis however. Sydney house prices are down -3.4%, while regional NSW is in positive territory, up 4.1% over the year. This is a market with very little activity rather than one being driven by widespread distressed selling. One of the clearest features we are seeing is the growing gap between properties that sell well and those that don’t sell at all. Increasingly, that gap comes down to the agent you’ve chosen. The small decisions, the conversations and the judgement of your agent throughout a campaign are adding up to very different outcomes for sellers. If you’re considering your property options, be it buy or sell, nest or invest; get in touch with us for a no obligation chat. Working with Ray White offers the unique advantage of combining a fiercely local, community-focused approach with the vast resources and prestige of Australasia’s largest real estate network. Matthew Kidd Principal, Ray White Bensville/Empire Bay WHAT’S HAPPENING IN OUR MARKET?
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