The financial services royal commission has become a bogeyman of sorts for the property industry, blamed for all housing-related issues from poor open-for-inspection numbers to falling auction clearance rates.
However, this is just not the case. A range of issues have been weighing on the market, from APRA’s crackdown on lending, to buyer exhaustion at sky-high prices and the dropout of foreign buyers.
But the royal commission has been seen as the tipping point. Clearance rates fell from March, about the same time as the first round of hearings.
Toward the end of 2017, our local housing market was losing heat amid the clamps on lending it appeared things were stabilising. But in March, things took a turn.
Oddly enough the only thing that happened in March was the royal commission.
Since then the monthly clearance rate in Sydney has been in steady decline, reaching its lowest point since 2008 at 43.5% per cent according to Domain.
The consensus appears to be that lending conditions have had a bigger impact earlier this year, but now the worsening sentiment has fed on itself to drive recent price weakness.
Susan Mitchell the CEO of Mortgage Choice said the personalised nature of finance approvals meant it was difficult to judge how much the average consumer’s buying had been reduced by the changes, but noted some borrowers lost up to a third of borrowing capacity.
The royal commission happened to occur at the same time lending credit was tightening, it happened at the same time that NSW and Victoria increased stamp duty on foreign buyers.
Over cautiousness from buyers and concern that the market will continue to weaken well into 2019 has influenced buyer behaviours and buyers just aren’t buying as freely as they once were.
What we are finding is that good relationships with buyers is helping us give them confidence surrounding price and giving them the ability to commit.
If you would like to discuss anything I have spoken about in more detail feel free to get in touch anytime.
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