Market strength increases

There are very few stories now of people experiencing hardship from falls in property prices – though such stories do exist for a few unfortunates who have had to sell at a loss for one reason or another.

Instead, now there is a focus on improving numbers of people showing up at auctions and open homes, speculation about how quickly investors will return if there is a change in government and interest expense deductibility returns, and questions also about the stimulus which overseas buying might have.

I can in fact already see from my monthly surveys that investors are back in the market and that is one of the reasons I have been undertaking these gauges of market activity these past three or so years.

For instance, as noted here on many occasions this year so far, first home buyers have been driving the market since February with both real estate agents and mortgage brokers from that time reporting seeing more young people looking to take advantage of the lower prices, high number of listings, and absence of competition.

My most recent survey of real estate agents shows that a net 14% are now seeing more investors in the market. Three months ago a net 15% were still seeing fewer investors and six months ago a net 46%. The latest result is the strongest since February 2021 and we can gain some insight into why investors are buying.

I ask agents what the main factors are motivating investors. First, it is worth nothing that while three months ago 41% of agents said noting was motivating investors and they weren’t in the market, now only 24% say that. 25% of agents in my latest survey have said that investors are motivated by expectations of prices going higher. Three months ago this reading was 17% and six months ago just 7%.

This reflects the fact that a record of price gains on average nationwide has now become established with rises in each of the three months to August.

Investors are also likely to be motivated by expectations of interest expense deductibility slowly returning post-election (depending on who wins), and the obvious impact on tenant availability, rents, and prices which will come from seemingly unfettered record net migration flows into the country.