The last two months has been very steady as she goes. Notable changes have been a significant increase in the number of first home buyers. This was recently verified with confirmation that lending to first home buyers is at its highest since 2014. No doubt this is on the back of mortgage interest rates continuing at low levels. With the OCR recently confirmed as unchanged, rates at the 4 point something range for the next 2-3 years will be very encouraging for buyers generally.
We also note many landlords/investors selling their rental. In many cases this is a bonus for first home buyers. The removal of negative gearing and the bright line test going to five years is having a flow on effect of potentially increasing the number of homes for sale, but at the same time decreasing the number of homes for rent. This phenomenon will no doubt see rents rise.
One wonders if an unintended consequence of these recent changes is an increase in the supply of available homes to the point where there is an oversupply whilst effectively making the rental market unaffordable for many. It appears this may already be in play to some extent and the reason why first home buyers are making the move to purchase.
Whilst we are experiencing lower numbers through open homes it would be fair to say the percentage of those genuinely looking to purchase is high. Whilst overall the balance between supply and demand is favouring the buyer, in specific cases there is strong competition and premiums are being achieved.
One point of contention is the relevance of certain CVs (Council Valuations). Historically it has been acknowledged that likely market value will be in excess of this figure. Currently in some cases the selling price has been less than the CV. This has caused many home owners anguish. The fact is, the CV is the result of a mathematical algorithm, it is an arbitrary figure.
In short, no one made a physical inspection as part of the assessment of a CV. Broadly speaking, those properties with a high land areas are most likely to have a CV higher than the market value.
The legislative, tax, and banking (LVR) changes made in recent times have changed the dynamics of the market place. Put these factors alongside the introduction of the new CVs and you have a recipe for increased due diligence as both buyer and seller find a meeting of the minds.
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