The onset of Spring means a few different things; warmer days, brighter colours, swooping magpies, salad, and house hunting. But, this Spring, property selling season has opened with a different look and feel to previous years, when buyers might have been left feeling at the mercy of market conditions.
They were looking down the barrel of another year of renting or making do in a home that was too small, too big, too far away, too time-consuming, or not enough of something else. So, what’s changed?
In a nutshell, residential investor lending costs more now.
Regulations that govern the way lending to residential investors is calculated have changed dramatically, with the flow-on effect of making the property market more accessible to owner-occupiers, particularly first home buyers.
This was the intention of the regulators, APRA and ASIC, when they pulled some regulatory levers to subtly shift the balance of the property market. The concern was that property was running hot for investors, particularly in Sydney and Melbourne, and the ratio of lending to investors was creeping up on owner-occupier lending, which had potential to put the system out of balance.
The outcome has been a relatively quick cooling of some key property markets. According to Domain, at the official opening weekend of the Spring selling season, the Sydney auction clearance rate of 75.1 percent was the second lowest result of the year, just above the year’s lowest rate of 73.7 percent, which had been recorded the previous weekend. At that point, Sydney had seen seven weekends running with clearance rates below 80 percent, after 22 consecutive weekends above 80 percent. The same weekend last year was 82.7 percent.
And there is plenty of stock coming onto the market. Sydney has 800 properties going to auction each Saturday in September. For the opening weekend of Spring, 817 properties were scheduled, well above the 522 of the same weekend last year.
What all this means is the signs point to a buyers’ market this Spring. It means a broader range of buyers will have access to property markets in locations that might previously have been out of their reach.
If you are looking for a new home, this could be your year.
However, if you are a residential investor concerned that your borrowing costs have risen, there is no need to be hasty and rush out of the market. You aren’t entirely out of options. Your owner-occupier loan is your leverage to negotiate a good deal on your investment property loan. If your lender won’t extend your owner-occupier interest rate to your investment loan, shop around for one who will.