The PROPERTY DOCTORS, Sydney Australia Novak Properties
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The PROPERTY DOCTORS, Sydney Australia Novak Properties
EP. 1422 PROPERTY IMPACT WITH RATE CUTS???
The property market is poised for change as interest rate cuts loom on the horizon. Drawing on over three decades of Northern Beaches real estate experience, we dive into what tomorrow's anticipated rate reduction really means for property prices, buyer sentiment, and market dynamics in the coming months.
Rate cuts present a paradox worth understanding. While they offer immediate benefits – reduced mortgage payments and increased borrowing capacity (about $25,000 more on a million-dollar loan) – they're fundamentally a response to economic challenges. As our candid discussion reveals, "If rates are going down, the economy's bad." This context is crucial for property market participants to grasp.
The Northern Beaches market provides fascinating insights as Sydney's traditional "first mover" – where trends often emerge before spreading to other regions. We're already seeing telling signs: properties that languished for 90+ days suddenly receiving offers and exchanging hands. This suggests buyer sentiment is shifting ahead of official rate announcements. Meanwhile, some sellers are strategically waiting for rate cuts before listing, potentially increasing supply and creating a balanced effect on prices.
Looking ahead to the next quarter, we predict stable prices but faster sales, with rental costs continuing their sharp upward trajectory. The market has largely factored in expected rate cuts, with savvy buyers and sellers already making moves based on anticipated changes. For those navigating this evolving landscape, understanding these nuances could make a significant difference in timing and strategy.
Ready to make informed property decisions in this changing market? Subscribe for weekly market insights from agents on the ground experiencing these shifts firsthand.
Okay. So everyone's wondering what's going to happen to the property market the next quarter. If'm gonna, it's a good day, Hopefully it's. Oh, we're gonna have some good news tomorrow morning. People are gonna be paying less per month with their mortgages.
Speaker 2:And, and, and. People are gonna be able to borrow a little bit more On a million dollars, people are going to be able to borrow an extra 25 grand.
Speaker 1:Is it really? Okay? That's huge. Now tell us. The punt seems to be half a percent, sorry. 50 basis points or 25 basis points? What do you think is going to happen?
Speaker 2:I think it's going to be 25, and here's my reason why. It's a really, really bullish outlook. For NAB Bank to come out over the weekend and say they see five rate cuts on the horizon, it was on the news over the weekend for May, june, july and then another two at the end of the year. It's unanimous across all four big banks that we are seeing rate cuts Tomorrow. I'm confident. I think the money market's saying about a 95% chance there will be. It's just going to be a question of whether it's 25% or 50%. But look either way. If it's 25%, another 25% will follow behind it. That's what the money markets are saying.
Speaker 1:So we're real estate agents on the northern beaches Over 30 years experience For me. What do we think is going to happen to property prices as a result of a quarter percent?
Speaker 2:The direct impact. I think, as of like next week, will it impact next Saturday's open homes? Not so much, but we on the Northern Beaches, which is like a micro market it's a small market within Sydney is very much influenced by buyer sentiment and supply and demand. So when one of those two levers is really pulled or pushed, yes, we do feel it. Buyer sentiment what people genuinely feel in their heart of hearts is is is a big, is a big, um, you know, driver of property prices. But more importantly that supply and demand. I have noticed post election a little bit more stock on the market. Um, but it's interesting you were commenting off air you're finding a lot of buyers out and about ready to spend uh, not really bothered with what the rate cuts are doing because they know they're coming but you're finding more vendors are saying I will sell after the rates come down.
Speaker 1:I thought that was interesting look, I think this is what everyone bloody forgets and I think it's really dumb. If the rates are going down, the economy's bad. So you know, I we've got to remember that in any, in any, in any idea of what we think the property is going to market. Property market's going to do post the interest rates. It's a shit market and that's why we're reducing rates. We had covert. It was a very hard economic time. The rates got annihilated, they got slashed when it was build time and things were back on the way up, rates went up. So I think people go like yippee, you know, giddy up, how good's this, the rates going down? But it's like hang on a sec, guys, it's a shit, the economy's shitting us off. That's why the government's, you know, you know reducing these rates. So in a period of rates of prices going up, historically, when prices have really been out of control, going up rates, the government's used rates to slow the property market down. So this is the opposite end of the cycle.
Speaker 2:Yeah, but in addition to that.
Speaker 1:It's like everyone's like be careful what you wish for. You want the economy to be bad, so the rates go down.
Speaker 2:It's true, although they are measuring other things differently. They're looking at the um, you know the international, uh, all economics, all economics and um, and inflation. Look, I think the the good, the good news for the average day australian is um, they will pay a little bit less each month and they will have a little bit more to borrow. That that's the.
Speaker 1:That's the first impact they're gonna feel and the bad news is, economically, we ourselves, we're ourselves, and that's why they're bringing the rates down but we are getting this question all the time, all the time all the time it's, it's the quick.
Speaker 1:Well, it's just, it's such a huge amount of money in people's pockets um, food costs are up, rents are up, um, everything, materials are up, labors, like everything's expensive these days. So people are really looking for reprieve and it's probably the biggest lever to help Australians out. So as a net effect, billy, what do you think is going to happen in the next month, two and three with property prices? And before you answer that, I've got to tell everyone the northern beaches property markets has always been and they've had first mover advantage. Whenever I've watched, historically, the northern beaches property market, it's always had the first move advantage. They've. Whatever's happened on the northern beaches has then followed through to up to to other regions of sydney. What do you reckon next month, or two or three, property prices as a result of these rate reductions?
Speaker 2:well it's. It's funny I'm already feeling it in some in some campaigns, properties that have been on the month on the market for a little while to in the last two weeks that have been slow burning campaigns 90 days on the market have both had offers accepted and exchanged. Now I don't think that's a sign of coincidence. Oh, I don't think it's a sign of coincidence. Some campaigns are not meant to be really. You know, snappy, four-week auction sold, move on, never see the agent again. Some campaigns are not meant to be really. You know, snappy, four-week auction sold, move on, never see the agent again. Some campaigns are not meant to be like that.
Speaker 2:I had one vendor where they needed time to find a property. Prices were a little bit inconsistent during the campaign so it was hard to know exactly where we should end up. Although a property two weeks prior had sold for $200,000 less, we got an offer $200,000 more got the great result for the buyer and owner locked in that had been on the market for a while. I've got another property in Beacon Hill which was quite a tricky campaign. Very selective buyer got a deal done there and another one in freshwater. So I think the first thing we see is the market almost catches up and the stock that's been sitting on the market and sometimes appears overpriced that's what the buyers tell us all of a sudden they sell and that sends a message. Then the second impact is buyers start to feel like they can borrow a little bit more that's something we feel and sellers are encouraged to try and make a move when they see a little bit more stock coming on. And all of those three things have happened.
Speaker 1:I reckon property prices are going to be better but similar, and I reckon days on market will reduce and I reckon rents will go through the roof. Um, and in this in this market at the moment, because a couple of things, um, there's already been an x factor built in for these reductions. They've been talking unanimously that they are coming from anyone in the educated banking world. So that X factor of building in that reduction it's already happened in the marketplace. So anyone that's making a move has made that move on the back of there's imminence that there will be a rate reduction.
Speaker 1:Smart people they don't need to physically say it, they just know it's going to happen that's buyers, people that are selling, that have said we'll wait and we'll wait until after the rates are reduced, are reduced, I think, are going to be greeted with a lot more stock on the market. Not a lot, but probably in our area maybe five percent, which is, you know, measurable. Um, so then what happens is that any the net net effect will just be same. Same because it's going to be. They're going to be selling a bit quicker, but then there's going to be more properties coming on. So people have abstained for the rate reduction to sell their property, thinking that you know there's going to be more buyers out there. But the buyers have already been out there in the last month or two can you just have a look at the two comments we've got there?
Speaker 2:Sure Closing comments, I think from Lisa Novak.
Speaker 1:Yes, my screen just did weird things, it's all wigged out.
Speaker 2:It won't, let me put them on.
Speaker 1:Ah, yeah, my screen. Yeah, I can't, unfortunately sorry.
Speaker 2:I can read them, lisa. We can't show them but I can read them. Oh no, I think it was along the lines of auction clearance rates are not a good metric to follow because some of the data is not being reported by agents, so be careful, sort of where you actually get your market indicators from.
Speaker 1:Okay, I've got some A lot of swearing. Really Did I swear. If auction clearance rates are anything to go, by, far less properties went to auction in the past weekend than this time last year. Yeah, very interesting, yep there you go.
Speaker 2:That's probably one of three top questions we get asked at Open Homes Interest rates, interest rates, interest rates it's a hot topic Legends.
Speaker 1:Thank you, thank you for watching. That's what we think is gonna happen in the property market after these rates go down tomorrow. We definitely all you also agree. We reckon they're gonna go down tomorrow, billy, thank you very much.
Speaker 2:A legend thank you, hope you have a lovely. Have a great day. See ya, alright guys, see ya.
Speaker 1:Hope you have a lovely Monday, have a great day. See you All. Right guys? See you Bye.