A Month In Review | Real Estate
We’ve seen two major announcements featuring the Reserve Bank in the past fortnight.
The first was the appointment of a new RBA governor. Michele Bullock, who has been the RBA deputy governor since April 2022, will take up the top job on 18 September, replacing Phillip Lowe who held the post for seven years.
The other important revelation was a cash rate pause at 4.1 per cent. While it’s likely rates could rise again in the near-term, the decision to hold for now demonstrates the RBA is taking a steadier approach to cooling inflation. The unchanged cash rate will deliver some relief however it will take several months for any previous rate increases to be felt fully by households.
There is also an undercurrent of uncertainty among property owners at present. That’s part of the reason behind an unseasonable jump in residential listing numbers throughout June and July. It appears some owners who’d held off selling over the past year or so are now looking to capitalise on a more balanced market. My suspicion is we’ll continue to see additional properties hit the portals in coming months. Listing numbers may well amplify post-Christmas too. Consumer spending during the festive season combined with the full impact of rate rises to date will prompt many to rationalise their household finances in early 2024 and some will choose to sell down assets to help balance the books.
Which leads me to the other big challenge in population centres across the country. There are simply too few rental properties to meet the growing demand for shelter and the situation will become more imbalanced as immigration ramps up.
Attempts to relieve the burden on tenants have seen some sectors of government implement legislative changes. This has included discussions around limiting rent increases (or even freezing rents) and altering legislation to provide tenants with more certainty… but these moves are often to the landlord’s detriment.
It’s important to take a step back and consider what’s happening in the rental space. The case is fundamentally one where low supply and high demand have resulted in tighter vacancies and higher rents. Any moves designed to ease rental pressures should probably focus on increasing supply. As such, a measured approach that doesn’t overly interfere in an already fragile market where investors play an important role in the supply of housing would seem like the most effective strategy for our leaders.
Looking to the rural sector and our experts have noted that rising interest rates and softening commodity prices have tempered property buyer enthusiasm across many industries. After several years of impressive and seemingly relentless price growth, our teams are reporting that we’re back to 2022 price levels in several locations and sectors. There’s also been an uptick in large operations and aggregated holdings being purchased by institutional investors.
A week may be a long time in politics, but a month is an eternity in property. With things moving so quickly and so dramatically, it’s crucial to rely on advice from independent professionals working daily in their speciality markets.
*** Article written by Drew Hendrey at Herron Todd White
