In summarising our market
What a journey through an incredibly trying period over the past 18 months. Family heartache, business closures, job losses, and unbearable ongoing isolation. Who could have predicted that the property market would not only survive these conditions but excel in them? No-one. During March – September 2020 the market fell 3%, quite modest given the conditions, and then the extraordinary transpired. With low interest rates and no travel opportunities on the horizon the market gained momentum and lifted an incredible 17% over twelve months. In my thirty-three years in property, I have not witnessed a stronger market. The unnecessarily low interest rates of 0.1%, unmoved for twelve months was certainly a motivator, but can’t be solely credited on the insatiable appetite to purchase a property and do it now! Naturally all cycles change tact. The momentum of capital appreciation over the last year was unsustainable. Economic experts and journalists are predicting a peak in the market early to mid-next year but in my opinion, we have already passed that point and are now observing a less robust environment. Auction clearance rates are lower, (not surprising when you have up to 2,000 auctions a weekend), days on market are longer and monthly appreciation is less, (only 0.6% last month). The overwhelming prediction is that the market will dip between 20% and 30% in the second half of next year should interest rates rise by 1%. I don’t subscribe to this theory. The biggest drop in any given twelve-month period over the past 40 years is 11%. Interest rates will undoubtedly increase next year but the return of migration will surely take up the slack. The economy is on track to strengthen – many small businesses will have all but recovered, job vacancy rates will be low, but sadly wage growth will be gradual. The real estate market will settle to a growth of 5% next year and with consumer confidence returning a stable return of 5-8% during 2023 (my personal view) should transpire.Interestingly over the past 3 months we have witnessed an ever-increasing incline in listings, November alone recording the highest for 6 years, record auctions numbers, investors back with a vengeance and another peak in the market. The first home buyers have sadly been pushed and shoved from pillar to post, and having to continue to grapple with yet more incentives. I am hoping that this sector of buyers has a more even playing field during 2022.
Michael Ramsay
Principal
The Advocates