By Tim Wirth.
While 2018 was an interesting year in Seaforth real estate, it has been even more interesting reading about it in the press! Here, we have distilled what the market changes are and what it really means to the residents of Seaforth.
It is always far more thrilling when the values are going up, but reviewing the Seaforth Market over the past few decades within each cycle there are periods of decline and stabilisation before moving to the next growth phase.
Sydney is now about halfway through the decline phase, according to Heron Todd White Valuers who regularly chart the phases property markets throughout the country. My expectation is within the next 18 months the market will stabilise, and will remain so for some time, potentially several years, before we see substantial growth start again.
Underlying triggers of market change
The principal cause of change in the market stems from the tighter availability of credit combined with more hoop jumping to get that credit.
Pre-approvals on loans are being reigned in with $500,000 not an uncommon reduction in borrowing capacity, even for buyers who were not stretching their LVRs in the first place.
Buyer confidence is the second driver of market change, and we’ve certainly moved from unbridled enthusiasm to extreme caution.
The RBA Governor cautioned banks that they may have already gone too far with the tightening of lending criteria in November 2018. “A few years ago credit standards were way too loose, there has been a correction of that, but I am starting to be a bit concerned the pendulum might be swinging a bit too far the other way… I am hoping in time it will come back to the centre.”
Changes at the macro level of regulation take time to flow through. Often in the market we feel things swing too far before corrections are made. From what we see, the Governor is spot on with his assessment of banks’ current approach to lending and expect that finding the right balance will be a major element in stabilising the Sydney & Melbourne markets.
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