I have already received calls from buyers and sellers in despair over the news of a ‘rate hike’ at one of the major banks not 3 days since Macquarie bank was quoted over a ‘7.5% drop’ in the market.
Internal sources have confirmed that Macquarie was misquoted over the ‘7.5%‘ comments in recent stories however the news of a 0.2% hike at Westpac only adds insult to injury in such quick succession.
The media has been quick to jump on stories about the property market especially stories relating to the market’s demise, often as bewildered buyers and nervous sellers are quite malleable in their opinions and sentiment toward the market.
It is a little unfair to spruik major headlines, especially when they’re misleading, but this wouldn’t be the first time.
The ironic thing about negative comments regarding the property market is, buyers gain confidence in a falling market which may add fuel to the fire. Conversely, the mixed message is, hype around rate increases destroying sentiment among buyers. The truth in all of this is, although prices have risen, it was time for a rise as the market typically sees spikes after times of stagnation, which we have seen a lot of. Also, rates are still low, lower than 3 years ago, lower than 10 years ago and certainly lower than 20 years ago.
In fact: you would have to go back to 1959 to see interest rates at a similar level to what they are now.
The proportion of separation between price and interest rates is surely what will be the perfect blend between buyer sentiment and seller satisfaction, even if the market plateau’s, we are all in good hands, let’s read these stories with a level of practicality.
There is now new speculation that we may witness another cash rate cut from the RBA is this what we want or need? Probably.
I read a quote from Warren Buffett and I can’t remember exactly what it said but it was something along the lines of, and I’m paraphrasing: “don’t worry about the market, worry about the company you are buying shares in, if it is a good company, buy them, you need to believe in what you purchase”. I believe the same goes with houses, now that the Real Estate market is a trading market, we should not just focus on short term gain, hell, some people have made $500,000 in 2 years, others in 7 but the money is there.
Thomas Merriman.
Thomas Merriman 