As the Sydney market records it's fourth consecutive month of increases in value we take a look at what caused the slow down and what this says about what is coming next...
The reality is when it comes to this current property cycle, the market simply wasn’t ready to stop. Regulation and Banking Royal Commission knee-jerk reactivity is largely to blame.
When APRA among a raft of regulations put caps on investment lending and imposed excessively high servicing benchmark rates for banks, in the click of a finger all the dynamics of the market changed.
The result was an almost annihilation of the investor market while owner occupiers saw their borrowing capacities drop by as much as 25%.
In addition to this homeowners with the major banks found themselves with interest rates considerably higher than the going competitive rates but without the ability to show borrowing capacity necessary to switch the loan they were already making repayments on.
Then there was political pressure. Irrespective of your political leanings, Labor’s promise to abolish negative gearing in the run up to the recent federal election did nothing to put confidence in an already sluggish market.
All in all, the market spooked, then came the property obsessed media with incredulous claims about falls of up to 50% and that was that.
So, what does this mean for the current upward trend in prices and activity? Well, you might be surprised with the answer. In the next post we explore what is driving the current resurgence and make predictions about where it's headed.
Is it a blip or is it a boom?
What's behind the latest rise in prices and will it continue Read on >>
For more on this or to learn more about why we think Orchid Hill Wadalba is the best value land on the Central Coast, call Chris White on 0400 247 741.
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