Mixed market outlook for spring

A leading real estate economist has predicted the busy spring period to tilt in favour of buyers as more properties hit the market and rising interest rates cause a price correction.

REA Group senior economist Eleanor Creagh has predicted economic uncertainty may cause buyers to be more hesitant than in turbo-charged seasons of recent years.

“But this year, interest rates are continuing to rise at a fast clip and home prices are falling around the country. The rapid pace of rate hikes is seeing the cost of servicing a mortgage increase, reducing borrowing capacities and weighing on confidence and buyer sentiment,” she said.

“While the labour market is strong, with unemployment at levels last seen in the 1970s, consumer confidence has fallen sharply, indicating that many are feeling a sense of unease about the future.

“There’s still a lot of uncertainty around future borrowing costs, cost of living pressures, and how far and fast the Reserve Bank will raise the cash rate.”

But Ms Creagh expected the relatively small pool of buyers that did venture into the market would benefit as competition for properties decreased.

“Market conditions have shifted and sellers no longer have the upper hand. Buyers have more time to make decisions, with homes spending longer on the market,” she said.

“The increase in listings could be good news for those looking to purchase. There’s a lot more choice and less competition, which could create opportunity for some.

“And with expectations of price falls abound, this may also prompt some sellers to bring forward their selling campaigns before further falls, keeping new listings elevated.”

Despite the decrease, Ms Creagh expected buyer interest to remain above pre-pandemic levels even after falling slightly in recent weeks compared with earlier this year.

“It’s also above the average level of potential buyer interest seen in August over the past three years,” she said.

“However, properties are taking to sell, and with prices falling, vendors are having to adjust expectations in line with market forces.”