News Blog - Residential
CALL FOR CALM
It was somewhat inevitable that the strong growth cycle in the Sydney market would eventually slow. What has surprised me though is the immediate negativity surrounding the current climate. Surely a slowdown is healthy given the rate of growth since CoreLogic RPData reported this cycle began back in May 2012.
Changes to lending criteria
We have seen very deliberate tactics to help cool the market, such as tightening lending for criteria for investors and increasing the borrowing rate on investment loans. In the grand scheme of things this probably isn’t a bad thing as it may help prevent a dramatic correction. It also benefits those trying to break into the market as they now have slightly less competition.
The reality is buying conditions are still exceptional for those in the market. Interest rates remain at record low rates and there is a good selection of property currently available. Whilst the auction clearance rate has dropped compared to last year this seems to be a direct result of more properties being listed for sale / on the market. If anything I would personally feel more comfortable buying now than any time in 2014 or 2015, a sentiment re-enforced in this article from RP Data CoreLogic where they are forecasting a solid 2016 for the residential market.
Looking at a more global picture, this article published by The Telegraph (UK) earlier this week reports significant stablisation across global economies with manufacturing showing signs of recovery and in fact growth. The flow on effects from these figures leads to positive sentiment about a recovery rather than a downturn.
Off the plan purchasing legislature
On a more specialised front it was great to see the NSW Government implement change to the off the plan purchasing legislature. This law change is to protect purchasers from any deliberate delay of a project by a developer and rescinding of contracts only to sell the apartments for more. Previously this kind of behaviour left the original purchaser high and dry. This is long overdue and more importantly retroactive for any existing contracts.
Essentially it is important not to overreact to sentiment without scratching the surface for more facts. In the midst of supposed uncertainty the inner city seems to be resilient with Domain reporting that demand continues to be very strong.
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