Today’s market could actually be a better one in which to buy and sell.
We go behind the data to explore the trends that are impacting the real estate market to explore why.
First of all, it’s impossible to mention today’s property market without acknowledging the impact of rising interest rates and inflation. Inflation officially hit 5.1% in the March quarter and that forced the RBA to lift the official cash rate from 0.1% to 0.35% – the first time it had moved the rate upwards since 2010.
Generally speaking, interest rate rises have the effect of cooling the property market because they impact how much people can borrow. But we haven’t really seen an immediate impact here in Darling Point.
By and large, we’ve found that those people buying with a mortgage expected rate rises and had factored them into their budgeting. Importantly, in our area, a lot of people also buy without a mortgage – particularly downsizers – so rising interest rates haven’t really had the same impact as they might have elsewhere.
The federal election
Elections are generally times when people hold off buying or selling and take a ‘wait and see’ approach – causing property market activity to stall. Never was this more evident than in the 2019 election when property market activity stalled in the months before the election and then picked up almost immediately when the polls were over.
Back then, however, there was a real difference between the two political parties when it came to the property, with the Shorten-led ALP promising to abolish negative gearing and restrict the CGT concession on property. Many people stayed out of the market fearing a Labor win would lead to property prices falling.
This time around, neither party has any policy that impacts the market quite so dramatically – even the Coalition’s recently announced Super Home Buyer Scheme won’t have quite the same influence. So we’re still seeing properties hit the market and buyers are still about.
One trend that we have noticed over the first part of this year is more supply coming to market. Over 2021, there were few properties for sale compared to the number of buyers and this drove prices rapidly upwards. This should come as welcome news to buyers, who now have greater choice.
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The shortage of properties has been especially acute in the market for three-bedroom and bigger units and that’s where we saw the biggest price rises.
Domain’s suburb statistics reveal that the median three-bedroom property price in Darling Point has risen an incredible 92.5% over the past year. Meanwhile, the median price of two-bedroom apartments has lifted 21.6%.
A more balanced market
With more supply on the market, we’re seeing the pace of growth moderate. Sellers shouldn’t necessarily be disappointed by this – in fact, we think many will welcome it.
Anyone selling today will still be locking in the tremendous gains made over the last 19 months. But more importantly, most people sell with the idea of moving on to a new home. With more stock on the market, those buying and selling have a greater chance of finding a good home to move on to.
While Domain is recording that the auction clearance rate in the Eastern Suburbs is now below 60%, quality properties are still selling well, even if the eventual sale happens after auction.
It’s always best to buy and sell in the same market and today’s conditions give people a little more breathing space to buy and sell than they’ve had over the past couple of years.
Thinking of buying or selling in Darling Point? Get in touch today.