Federal Budget week is always big news but especially so in an election year. The promises and projections of cash splashes and announcements of taxes cut or created has the potential to impact business, family, and individual decisions. But interestingly not so much this year. I wonder why?
Our team are talking budgets every day of every week with our clients. It’s incredibly important for our team to help ensure vendors, purchasers, owners, and renters have realistic projections of the income and expenses related to a property so they can be confident of their budget. Confidence in your financial position fosters confidence in property decisions and at Morton, our aim is to minimise stress and support clients to make good decisions.
And so it is that often announcements made in a Federal Budget will influence property projections and therefore impact individual decisions. It’s still early days after the Budget release but I’m not seeing that this year.
The main factors influencing those in the property market are not ones of policy or promises. They’re practical and they’re impacting decisions right now across all segments of the market.
Cost of living. It encompasses everything and it is being talked about everywhere, every day.
It’s quite fascinating. The cost of living is always a factor in decision making but never have I heard it referenced as often or as fearfully as it is now. It’s why I think the market is starting to falter a little. Everyone is conscious of cost increases they are seeing today and they’re nervous about what tomorrow might bring. And no announcement in the Federal budget alleviated those nerves.
This isn’t just a first home buyer issue, it’s an issue for all buyers. It’s also not just about interest rates. It’s the cost of everything. Budgeting for cost increases is vital but a bit daunting.
As a result, the residential property market is nervous, and participants are being careful. Potential purchasers are more cautious than I’ve seen them in a long time. They’re still in the market. They’re still prepared to pay good value, but they are increasingly careful to try to factor in the risk of increasing costs.
That’s sensible. It’s realistic. It does impact the vitality in the market, but it doesn’t mean it is the end of the world. Even with the slight decrease recorded in March of -0.2% values in Sydney are still up over 20% in twelve months.
It’s important for vendors to recognise the wider cost pressures influencing buyer motivation. As in every negotiation, both parties will be doing their own budget calculations. It is the role of our team to help find a way to balance those budgets and deliver the best possible property outcome in the current economic environment.