This week is the start of the HSC in New South Wales. Is it the sad end of school or the exciting start of a new adventure? As with so many things in life the answer will depend on who you are, and with that, your perspective. The same can be said for the residential property market…are we looking at the end or the beginning?
The double-digit returns delivered over recent years by the residential property market have been amazing. As I have said before, those returns were sustained over a long period of time which has been great news for property owners but also, perhaps, a little bit dangerous.
The undeniable fact is the expectation that a property is guaranteed to deliver capital growth does impact the way people approach listing a property and the way potential buyers approach the market. It acts as a deterrent to those looking to buy and as an incentive for those considering selling.
So, with the market easing and the realisation that there never actually was a guarantee of value growth, how are people now approaching property? Is it the end of the good times or the beginning of new opportunities for new participants?
You might assume the answer to that will depend on your perspective. Prices easing will be good for those looking to purchase, but not make potential vendors very happy.
In fact, I think like the HSC, the current market conditions represent both those things to both those groups. It is the end or the run of record-breaking prices but certainly not the end of the market. Like the HSC the unknown of what happens next has been a bit nerve-racking, but we are already seeing a very interesting dynamic emerging from the shift in momentum.
We’re getting more enquiries from new potential property purchasers. New buyers are emerging, willing to test the waters of the market with more confidence now they are seeing vendors have more realistic value expectations.
These enquiries are coming from people who have factored in the interest rate rises and have a clear idea of their budget and their property requirements. They are entering the market with a new determination making for interesting and dynamic negotiations.
So, we are beginning a new adventure where the market is different, but I encourage everyone to recognise that it’s still exciting and full of positive opportunities.