It provides each of us with a flow of services in the form of a roof over our heads, a place to raise a family, a base from which to go to and from work, markets, and suchlike. But it is also an asset which we use to help fund our retirement by downsizing to less expensive accommodation when the time is right.
To boost that wealth accumulation aspect, we also treat houses other than the one we live in as an investment asset. There are times when many people are seeking to purchase such an asset and other times when they aren’t. When interest rates are high the cost of purchasing a housing asset increases because most people make their purchases with someone else’s money borrowed from a bank. So, we put off our buying.
This putting off usually coincides with people thinking about upgrading and people looking to make their first purchase also backing off. That is what has been happening since March 23 for investors and since late last year for potential owner-occupiers. Their actions continue to dominate the real estate market and we see this easily in terms of falling prices, now down by 10.4% from their November 2021 nationwide peak.
The weakness manifests itself also in an increasing average number of days taken to sell a dwelling, now sitting at 47 from 31 a year ago.