Are we in a property boom, a bust, or a normal market?

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Property prices boomed in the pandemic and are still sky-high but have started to edge lower. So, are we still in a property boom, and if not, then what?

In a normal property market, the auction clearance rate is about 60 per cent, there is a healthy amount of homes for sale, and one buyer for each seller.

Healthy levels of homes for sale are another factor, alongside having a clear run of weeks to open a home for inspection without the interruption of lockdowns. “You’ve got buyers who’d like to buy and sellers who want to sell, but what we had before was buyers who wanted to buy and hardly anybody who wanted to sell.

In Melbourne, Barry Plant executive director Mike McCarthy agreed that the city was heading into a normal market, adding that inner and middle suburbs were already there while some outer suburbs were still at the tail end of a strong market. “I’ve seen a lot of pass-ins, but by the end of the day you’re seeing a sold sign on them, or you’re seeing a sold sign on the Monday or the Tuesday,” he said.He said buyers were quick to adjust once they saw other properties passing in, and may not bid as strongly, meaning sellers needed to look at very recent results to work out where their home sat rather than relying on nearby sales from late last year that may no longer be achievable.

“People potentially may be re-rated with their buying power as the interest rates continue to rise. They might have a loan application for $1 million today [and] in another [period of time] that $1 million becomes $900,000.”

 

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