Looking for the good

I’m writing this whilst waiting for news on the decision by the Reserve Bank on interest rates and thinking about how I’ll respond to the inevitable questions that will follow from clients seeking clarity about the subsequent market impact. What to say?

Look. It’s a tougher market than we’ve seen in a very long time and to be brutally honest I don’t see that changing regardless of the size of the rate rise announced today by the Reserve Bank. 

Yes, I am assuming rates will be increased. I think most people are, which is one of the reasons I think today’s announcement won’t change the trajectory of the residential property market we’re currently on. It’s going to stay tough, but it is never impossible.

Values did drop again over the last month with Core Logic reporting Sydney declined by -1.8% in September. However, it is good to see those figures accompanied by data to contextualise that fall. Nobody likes a fall but it’s incredibly important to keep it in perspective.

Don’t forget that in what was an extraordinary run of strength that lasted until May this year residential property across Australia delivered a 28% increase in value over the last couple of years alone. I know I’ve said it a million times before, but I can’t stress enough how important it is to recognise that bigger, long-term picture when making decisions in the current market. 

Yes, it is harder right now to achieve a record price. It is perhaps harder to achieve a result equal to that of a property in your local area that sold in February this year when the market was at its peak. That doesn’t automatically mean an offer received now isn’t delivering value or a healthy return on your investment. And to be very honest our team is still negotiating very, very healthy offers.

You have to do the sums to determine if aiming for the top price and waiting for the strongest market is what you actually need. We all want it, for sure, but is it what you need to achieve your business, life, financial and family goals? I’m not getting all soft and emotional to try to minimise the finances. Those are actually crucial business considerations. And those thinking of listing now will no doubt have had very valid reasons why they chose not to list earlier when the cycle was so strong. 

It’s also worth noting that in their September analysis CoreLogic reported the rate of decline in Sydney was slower than the month before. Still a drop….but not as fast. So is that really good news worthy of note or just a desperate attempt to find something positive in otherwise challenging data?

I think it is good news. Vendors and buyers are adjusting their expectations. Hopefully, that will continue as everyone comes to terms with the reality that, for now, the market has moderated and therefore so should their expectations.

………and there you go. The Reserve Bank has just announced a 0.25% increase in rates which might come as a good surprise to some as it is less than most analysts were expecting. I don’t think it changes what I have said in this blog. There is good in the market.