24 JULY 2019
It’s been a funny couple of months for us real estate agents. Plenty of things to talk about. Lots of keen eyes on the latest sales data to track how things are going.
Many of us in the industry were intently watching the election result. Whether you were happy or not with the outcome, it provided some much-needed certainty.
The ‘surprising’ result meant that there is unlikely to be many changes to housing policy settings in the near future. Whilst the property market is largely controlled by the forces of supply and demand, governments do play a role in the market. Over the years, both the state and federal governments have pulled levers to activate the market. First home buyer grants, stamp duty exemptions, cash handouts to move to the country and incentives for older people to downsize have all played roles during our time as agents. These often kickstart a longer boom.
The NSW government’s decision a few years back to waive stamp duty for first homeowners paying up to $650,000 still impacts activity. It has meant that these buyers are rarely willing to go above that cap. If a first home buyer wanted to buy a home for $700,000 then their stamp duty would add close to $11,000 in extra costs. This is still lower than the $27,000 a second home buyer would but seems unfair in the eyes of first-time buyers.
We’ve always believed that encouraging people to invest and save for their future is not a bad thing. But concessions should be capped at a certain point.
One thing that we think is certain: It will be a brave political party that will be suggesting such changes in the future. We’ve always believed that encouraging people to invest and save for their future is not a bad thing. But concessions should be capped at a certain point.
The Reserve Bank finally cut Interest rates in June too. It’s been several years since the last movement and this one was widely tipped. It’s usually a sign of a struggling economy and a desire to use housing to kickstart things off again.
To see a bigger pickup in buyer activity and prices, we think it comes down to getting more investors back into the market. This cohort was largely shut out of the market for the last 18 months due to prudential controls imposed on banks. We are now starting to see more investors buy our properties in recent weeks which is a good sign (in our little part of Newcastle anyway).
A couple of days before the last election, the federal government announced a scheme to help first home buyers purchase their first property. Whilst this has not been legislated (as at the time of writing), the plan is that eligible first-timers will only need a 5% deposit rather than the 10 – 20% that is typically asked. In effect, the government would bank roll mortgage insurance costs which according to government estimates would save around $10,000.
This policy is based on a scheme already in effect in New Zealand. It has some strict conditions and is limited to just 10,000 first home buyers, which is less than 10% of first-timers each year. This could save a significant amount of time to save for a deposit, but also means first home buyers will pay more interest in the long run. Sounds like it will help a lot of younger people move from being renters to homeowners which can only be a good thing.
The week after the election we sold five houses within four days. Does this mean we have turned a corner? Perhaps. More likely is that buyers were waiting until after the election to make decisions. We would not be confident enough to say we are at the bottom of the market but feeling slightly more optimistic than when writing our last market update.
As you can see by the results below, prices in the Newcastle, Maitland and Lake Macquarie council areas have softened. The latter being a little more stable over the past 12 months.
The current median price in Newcastle (for the three months ending March 2019) was $601,500. This is down from $640,000 for the year earlier.
Prices in the Newcastle, Maitland and Lake Macquarie council areas have softened. The latter being a little more stable over the past 12 months.
There has also been a substantial drop in the number of actual sales being transacted each quarter. 12 months ago, between these 3 council areas, there were 1764 sales. This year, this has dropped to 1433. This is the lowest volume for at least the last ten years.
The good news is that buyer numbers at open homes are improving. Offers being made by buyers are stronger – most times were seeing multiple offers being placed on the same property. Another plus is that properties are starting to sell faster rather than sit on the market for extended periods of time. Overall, we’re seeing a positive turn with buyer activity so it will be interesting to see how the market travels over the peak selling period of Spring in the coming months.
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