Although Sydney and Melbourne’s market slowdowns have been dominating headlines, the news isn’t all bad, with considerable divergence across the country. Hobart, Canberra and Brisbane are seeing positive momentum.
CoreLogic’s Tim Lawless warns negative equity could be a risk for recent home buyers with data showing national property prices sitting 32.4 per cent above those five years ago. Those flipping properties are at risk of feeling the biggest impact across the country. According to Sally Tindal of RateCity, “people who bought at the peak of the market could be in a financial noose.”
Economists predict the Reserve Bank to hold out until at least 2020 before increasing rates. Despite this, international funding costs are causing smaller lenders to raise their rates, and the big four banks are feeling the pressure to follow suit. Pressure on lenders is also forcing them to be more prudent, seeing some requiring 20-30% deposits. This is bringing difficulty for those refinancing who purchased initially with a small deposit.
Concerns are rising that price drops resulting in a weaker housing sector will see the economic impact passed on to the construction industry and others associated with housing turnover.
Download and read the full Market Essentials – August 2018 Report.