Quarterly Property Market Update – December 2010

Based on The Age Sunday Results*

Interest Rates and Volume Put Auction Market To The Test

The last quarter of 2010 has seen the strength of the property market – as measured by the auction success rate, progressively decline to levels more closely resembling the long term profile we can expect. Mortgage rates are back up to 7% and over, and solid volumes in the latter part of spring market have largely satisfied buyer demand.

It must be stated the current mortgage rate remains historically very low, and “back up to 7% and over” – as though this level could be concerning – might sound like a weird observation to those of us who have been around a while(!) However, what matters in this context is where the current level is relative to where it has been of late. To that extent, recent increases have a different significance. Our feeling is the current levels are at a “comfortable maximum stretch” for those who have bought into the market during the last two to four years. If interest rates were to go up another percent or two this would become stressful to many. This may not occur of course, but borrowers are likely to remain more cautious from here on.

Have the rapid rises we have been seeing for ten plus years finally run their course? We think so. A levelling out is the most likely scenario; but not a “crash”. Real estate is a long term proposition and picking tops and bottoms of anything – like real estate trends, is never easy. From here on in, we anticipate the medium term may present good buying opportunities for owner occupiers and investors, with a little less competition from competing buyers. As always, choosing the right property in the right location will provide property owners with the best returns in the long term.

From Renowden Buyers Advocates, thank you for your much appreciated support in 2010.

Merry Christmas and a Safe and Prosperous New Year to Everyone in 2011.

And as always…. Happy house-hunting,

Bruce Renowden