Darwon's Theory | Balance of the Force

Well, rates have risen for a historic sixth consecutive month. The good news is, yesterday's rise was more moderate than what we've become used to - 25 basis points rather than 50. That means the cash rate has reached 2.6 percent (the highest it's been since 2013). But what impact will a less-than-expected rise have on the property market?

Before I give you my two cents, let's explore expert opinion. There are people who are paid to speculate on these things. It's always good to get a wide range of opinions - and remember that that's exactly what they are. As we've seen, even the big guns can get it wrong.?

CoreLogic's Research Director is anticipating the rate of property price decline to increase, as interest rates continue to rise. However, the CEO of a real estate network has said we've reached the 'coal face' of the slowdown, and the managing director of another agency has queried whether the banks will take a look at their serviceability buffers and make some changes.?

What we've seen after six interest rates, one after the other, is that buyers' appetites haven't been affected - but their borrowing capacity has. A serviceability buffer trim would enable buyers to borrow more. Perhaps even what they were hoping to borrow 12 months ago.?

The good news is that consumer sentiment has already bounced. The ASX rebounded 3.8 percent yesterday afternoon, after the rate rise was announced. It doesn't seem like consumers and buyers are scared of entering the market - they simply need the means to do so. With that in mind, despite the headlines, now could be a very good time to sell for a few reasons.?

First, seasonality. For the last decade, Brisbane market's strongest months have been October, November and December. August is traditionally the weakest performing month. Elsewhere, it's completely different. In Perth, the strongest months are February and March. In Sydney, it's March. In Adelaide, it's November and December. Based purely on historic figures, we're entering Brisbane's best selling season.

Secondly, the old law of supply and demand. Many sellers have been holding off, waiting for more certainty in the market, which means there is an undersupply of homes. Coupled with the seasonal uplift in buyer interest that we always see in Spring, this undersupply is likely to cause increased buyer competition.?

If you want to get ahead of the inevitable rise in supply, get in contact to arrange an appraisal.?

Cheers,

S.D.