Firstly,
Again, stock shortages plague the marketplace, for better or for worse.
Most of what I talk about in this email will have this intertwined into it without laboring on it.
We are getting a lot of questions about peripheral elements to the market, or what may be perceived as peripheral, and whether they are part of what is forming or impacting the market; First-homebuyers’ incentives, prospective stamp duty changes and interest rates.
These elements may not directly impact most homeowners on the Upper North Shore, but they will have an impact on market sentiment which can alter the direction of the market.
First Homebuyers
The new governments version of this:
First-homebuyers will be able to apply for a limited scheme whereby the Government will guarantee up to 15% of a FHB deposit (20%) where the property is under $900,000. This time the definition of ‘couples’ has been expanded to include couples that are friends or family including siblings, for joint applications.
There is some criticism of this new version; 39% of Sydney property is available under this scheme with the median property price now being above $1,000,000. Further, Ku Ring Gai LGA is home to only 9% of properties under this threshold and Hornsby LGA up to 33%.
There are only 35,000 spots available for this grant, however 120,000 FHB enter the market each year.
Lastly, with buyers only having to provide a 5% deposit against the property, a small market fluctuation could mean that the changing value of the property could severely impact participants, despite the guarantee. Although prices have crept up recently with stock shortages, a lot of Sydney has seen 10-15% price decreases in the last 12 months, or at least since March 2022.
First homebuyer activity is up approx. 15% this year, but down over 20% year-on-year and down 50% since 2021.
Stamp Duty
The new Government has changed the incentives on stamp duty capping them to just $800,000, previously an annualized ‘TAX’ on properties up to $1,500,000.
The advocates for an overhaul to the Stamp Duty laws to permanently make this an annualized TAX are justified by their argument especially when considering ‘right-sizers’ – traditionally downsizers – the argument is that this stifles movement in the market.
Most people buying are selling a home elsewhere to fund the purchase, which will include the cost of an agent and legal expenses that then add to the legal costs of buying, and now, ever-increasing interest rates, and of course, Stamp Duty. Further, a lot of buyers are financing their stamp duty into the overall mortgage to assist with saving for a deposit.
Downsizers do not necessarily have to pay a mortgage and are therefore not susceptible to increased mortgage costs driven by interest rates but often stall their decision to sell based on the perceived costs of transition, Stamp Duty being a major one.
Local market:
Initially, as interest rates began to increase dramatically, we saw the market stagnate as buyers and sellers paused to see what would happen. Buyers were waiting to see where the buck would stop as to realistically estimate their borrowing expenses and sellers were waiting to see what happened so they could do the same, but also analyse the market more reasonably; prices were falling, and the idea was they would stop when the rate rises stopped.
9 months later and buyers eventually gave in as they gave up waiting, felt comfortable with where the market had fallen and to a large extent factored in the bottom of the market.
The confidence that has returned over the last 3 months (March, April, May) has seen prices stop falling as dramatically in some places and even increase in others.
However, most forecasts are that when stock returns, the price falls will continue which will level some areas back out and devastate others.
To document this with statistics from RealEstate.com data department below:
Hornsby LGA
Newly listed stock down month-on-month by up to 37% (around 50 houses less than usual) and down year-on-year by up to 28%
Therefor Sold property is down by up to 26%
The median sale price was falling but has slowed to be only down 3.7% year-on-year but up .4% month-on-month based on low stock levels this year.
Days on market have fallen by a couple of days.
Buyers are up; in April 2022 c. 9,000 – 10,000 buyers per month active up to around 11,000 – 12,000 in April 2023 The average buyers per listing in April 2022 was around 22 creeping up to 29 in April 2023
Ku-Ring-Gai LGA
Newly listed stock down month-on-month by up to 39% (around 50 houses less than usual) and down year-on-year by up to 23%
Therefor Sold property is down by up to 26%
The median sale price was falling but has recorded an increase up 16% year-on-year and up 4% month-on-month based on low stock levels this year.
Days on market have blown out by about 13%
Buyers are up; in April 2022 c. 14,000 buyers per month active but up to around 15,000 – 17,000 in April 2023 The average buyers per listing in April 2022 was around 24 creeping up to 29 in April 2023
Shockingly, withdrawn listings were around 40%
Wider market:
Interest Rates (RBA):
We have been warned there will be more rate rises. Some people remember the day of double-digit interest rates, but most current buyers haven’t seen rates above 3% and even seasoned buyers haven’t seen rates above 5% as has been the trend over the last 10 years.
Finance:
See a broker. If you would like a report on your suburb, please reply and I will send a copy straight over.
If you have any questions or would like a report on another area, please let me know.
Look after yourself and the people around you. |
Thomas Merriman 