property market in the eye of the storm feature
Image: The Property Tribune; Henry Thai.
  • Herron Todd White's April Month in Review report has been released
  • HTW CEO says the market is on the brink of significant transition in residential property
  • The Month in Review report highlights the myriad reasons behind this upcoming transition

With property supply tight and demand eroded, and elevated interest rates, Herron Todd White’s (HTW) latest edition of the Month in Review report highlights current market inactivity.

Herron Todd White CEO Gary Brinkworth says in the report the April pause in interest rate hikes is a crucial development in the current market.

He says that the consensus among analysts has been that we’re close to the peak of the rate rise cycle.

“I’m convinced we’re about to experience a significant transition in the residential property space in response to the rate pause.”

Gary Brinkworth, HTW CEO

The Month in Review report highlights myriad reasons for this upcoming transition relating to supply and demand.

Supply

Brinkworth explains that since early 2022, sellers have been dealing with economic uncertainty and the prospect of a long period of interest rate hikes.

“As a result, a substantial number of would-be vendors shelved their plans, deciding to wait out the turmoil.”

Herron Todd White reports that property listings are approximately 20% lower in April compared to the same period last year.

Demand

“While some purchasers were buoyed into action by softer property prices in late 2022, most saw their borrowing power eroded by rising interest rates.”

As a rough guide, Compare the Market crunched the numbers earlier this year, and within that context, borrowing power was slashed by almost $200,000, and potentially more, should rate rises have continued*.

Borrowers are seeing fewer available funds.

The eye of the storm

Brinkworth says the current trends in supply and demand have resulted in an imbalance that has caused market inactivity throughout most jurisdictions over the past 12 months.

Transaction numbers in Sydney, the largest property market in Australia, are down around 20% from 12 months ago, according to Herron Todd White’s research.

Brinkworth says the market inactivity is reflected in ABS analysis which shows new loan commitments have been falling since January 2022 and are down around 30% from a year ago.

“All this leads me to think this interest rate pause put us in the eye of the storm in terms of market activity”

Brinkworth predicts a post-Easter uplift in listings and transactions.

The next three months will prove critical in establishing the long-term direction of our property markets. It will be crucial to stay abreast of the changes to capitalise on opportunities.

~~

* The full borrowing power story here.




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