We’re in the downward phase of a typical market cycle that won’t last perpetually. The rate rise has been blamed for the lower clearance figures; however the drop in market activity has much more to do with buyer sentiment than affordability.
Rate rises only have a major influence on first homebuyers who find it difficult to absorb high loan repayments. However, it’s not first homebuyers who affect clearance figures. After much activity earlier in the year, they’re no longer a major competing force in our market and they certainly aren’t prevalent in the inner and middle ring suburbs where most properties are auctioned. The average first homebuyer loan is approximately $280,000 and most are only able to purchase in outer Metropolitan areas.
However investors and second homebuyers do have an effect on clearance figures and they’re in no hurry to buy into a market that’s attracting negative press, which may indicate prices will drop.
– Click here for the rest of the article (Source: API Magazine Website)
