Ray White Lower North Shore

The pandemic may not be over but it’s hard to find bad news in the Australian economy right now. Our GDP is back to where it was prior to the pandemic, the only country in the world where that is the case. Job ads are now at a 12 and a half year high and unemployment is coming down far quicker than expected. All of this continues to turbocharge the propertymarket and prices across Australia are nowup 10 per cent compared to 12 months agowith, for now, very little sign of a slowdown. The number of properties for sale continues to rise and mortgage rates are slowly creeping up and this should calm price growth. For now inflation remains under control and there is no cause for alarm when it comes to interest rate rises. This could of course change quickly and look out for growing speculation as to when the RBA will move on the cash rate. Investors Investors are back but their return has certainly not been as rapid or as strong as owner- occupiers. Owner-occupiers have borrowed almost $9.5 billion more in April 2021 than they did at the start of the pandemic. Over the same time period, investors have borrowed $3 billion more. The slower return of investors is not surprising. Rental markets were tough early on in the pandemic and the six month moratorium on evictions, while necessary, was a difficult time for many landlords. Incentives introduced during 2020 such as HomeBuilder were unavailable to investors. With prices powering ahead, and finance readily available, it’s expected that this growth in investor activity we have seen so far this year will continue. First Home Buyers There was a lot in 2020 that first home buyers liked. The first was the very slow market early on in the pandemic, conditions which are generally favourable for first home buyers. The second was the large number of government incentives available to them, ranging from the Federal Government’s first home buyer deposit scheme and HomeBuilder, to state based stamp duty reductions. The third was very few investors, a buyer category that tends to compete for similar properties to first home buyers. The number of home loan commitments to first home buyers hit a peak in January 2021, just under the previous peak in 2009, and since then have slowly trended downwards. The end of HomeBuilder was a big part of this, however rapidly increasing prices would also drive this. For now, it does look like activity from this group will continue to moderate over coming months. It’s hard to measure how much downsizer activity is occurring. There is currently a mismatch between house and apartment price rises in many established suburbs with apartment price rises far above house price rises. While this isn’t necessarily from downsizers, anecdotally, purchases of apartments are currently dominated by owner-occupiers with still very little investor activity. What’s happening in our market?