61% of respondents say they are less confident about buying, selling or holding property following the RBA’s September rate rise.
Cotality figures released today show national home values fell another 1.2% in October, extending the downturn to a seventh consecutive month.
67% of respondents believe current conditions favour buyers, as the RBA Board meets to decide its next move on interest rates.
As the Reserve Bank Board begins its November meeting and Australia’s housing downturn accelerates, new research from independent property valuation firm Opteon shows interest rate uncertainty is weighing heavily on property confidence.
The findings come as expectations of another rate rise have strengthened following September inflation, with the RBA due to announce its decision at 2.30pm AEDT tomorrow.
Opteon Managing Director Australia and New Zealand Scott Chapman said the findings showed rate uncertainty was heavily influencing how people approached property decisions.
“What we know from previous property cycles is that uncertainty can change behaviour quickly. Buyers become more cautious, sellers can hold back and activity slows. Those changes can happen well before the full impact is reflected in property values,” Mr Chapman said.
What Opteon’s survey found
Opteon surveyed 347 property owners, investors, buyers, renters and industry professionals to understand how the September rate rise had affected confidence and expectations for the property market.
The survey found 61 per cent of respondents were less confident about buying, selling or holding property following the RBA’s September decision, while 64 per cent identified further interest rate rises as a risk to the property market over the next 12 months.
The findings are reflected in fresh housing market data released today. Cotality’s national Home Value Index fell 1.2 per cent in October, marking a seventh consecutive monthly decline, while combined capital city values are now 8.1 per cent below their peak seven months ago. Cotality said the pace of decline across the capitals is tracking faster than any previous downturn over the past 40 years.
Estimated home sales over the past three months were also 23 per cent lower than a year ago, pointing to the pullback in buyer activity as confidence and borrowing capacity come under pressure.
What falling confidence could mean for the market
Mr Chapman said the latest market indicators were consistent with buyers becoming more cautious as higher rates affect sentiment and how much some people can afford to spend.
“Higher rates are making it harder for some buyers to borrow and giving others a reason to wait. When fewer buyers are competing for properties, homes can take longer to sell and sellers may need to adjust their expectations” Mr Chapman said.
However, Mr Chapman said the impact on property values would not be the same everywhere.
“What happens to values will still depend on the local market and the type of property. Areas where there is strong long-term demand and fewer properties for sale historically have held up better than markets where buyers have more choice.”
Survey respondents see opportunity for buyers, but caution remains
Despite weaker confidence, the survey found 67 per cent of respondents said current conditions favour buyers, compared with just 5 per cent who said conditions favour sellers.
With fewer buyers competing for properties and more choice on the market, some buyers may have greater negotiating power. However, uncertainty around interest rates is making some participants hesitant to act.
“Current conditions may give buyers more choice and negotiating power, particularly those who were priced out when competition was stronger. But nobody can reliably pick the bottom of the market. What matters most is whether you can comfortably afford the property over the long term and whether it is the right choice for your circumstances, ” Mr Chapman said.
Focus on your position, not the headline
Mr Chapman said buyers, owners and investors should consider their own circumstances and local market conditions rather than make long-term property decisions based on a single rate announcement.
“Ideally, one rate decision shouldn’t determine whether someone buys, sells or holds property. Understand what you can afford, look at what is happening in your local market, leverage local expertise and make a decision that’s still feasible even if conditions change” Mr Chapman said.
About us:
Opteon helps property owners, lenders, government bodies, and professional service advisors make informed and empowered property decisions with extensive coverage, industry leading technology, valuation experts, and systems.
We combine global data insights with the invaluable local knowledge of our expert valuers across 98% of Australian postcodes to deliver valuable valuation and advisory services for our customers and our industry.
