Ninja In A Blazer – 3rd November 2022
November 3, 2022Ninja In a Blazer – 24th November 2022
November 24, 2022I follow a lot of other agents around the globe, USA, Canada, and other States in Australia – I’m always trying to learn ways to better myself, and ways to help my sellers achieve a better and more efficient result.
In doing so, it allows me to see different markets and real estate styles around the world. Things obviously work differently internationally, however, I’ve just seen the USA have their first interest rate decrease after going above 7% interest last month in an effort to stem the inflation.
Now I’ve just seen an article, that says “Deutsche Bank has forecast Australia to enter a recession in 2023 due to a further slowing of the economy and a spike in unemployment”.
What does a recession mean for house prices?
Well, the one we’re in with higher interest rates mean we’re likely to see house prices drop as they have, but to lift a country out of a recession we’re likely to see interest rates come down and with demand for new builds dropping right off the charts a, due to the cost of building, and b, due to the interest rate rises. So with fewer new builds, but still the international migration, the Brisbane 2032 Olympics and related projects, I don’t expect this housing correction to last too long.
The one thing I’ve seen is the US and AUS aren’t exact copies of each other, but Australia does tend to mimic the US relatively well, and as you can see from the chart below, over the years Australia has been a little behind the US and their Fed rate, so I believe we’re likely to see the effect of the interest rate increases kick in before anyone realises it, and have to reduce the interest rate to stop too much chaos.
One thing I know is that borrowing capacity has taken a huge hit, around 25% in my mind, and although there are still a few decent sales in the area, there are more sales where the seller has had to come down to meet the market.
Brisbane house prices dropped 2.2% for October – this would be on the back of sales from August-September, and it’s dropped around 6% for the quarter. However, they’re still up 8% for the 12 months. I believe as the actual numbers are usually delayed in being reported, we’re probably fairly close to the bottom of the correction for Brisbane (10-15% in some cases) and we’ll start seeing an improvement early next year (Maybe March, but more likely May in my mind), however, if you’re waiting for the bottom to purchase, you’ll miss it due to the delay in the actual figures, and people will be back out trying to secure their next property again pushing prices back up.
In other news, Harcourts Queensland is planning an Auction Festival for the first week of February 2022. As most people are searching major real estate portals in January and people are wanting to make their moves early in the year, an Auction campaign during January with an auction on February 5th will put your property in front of buyers looking at 100 properties, there will be some major marketing associated with this event, so the increased exposure should help to capture more eyes and more buyers inspecting. Get in touch if you’ve been considering selling in the new year and this sounds intriguing.
