The flight to quality is well under way as market conditions change around the nation, according to the new Property Investment Professionals of Australia (PIPA) Quarterly National Market Update.
PIPA chair Nicola McDougall said property markets remained sound with experienced homebuyers and investors understanding the central bank’s need to increase interest rates from their emergency pandemic-induced lows.
“However, in all my years of reporting on property markets and economic metrics, I don’t think I’ve ever seen such outlandish commentary on the interest rate increases as occurred in May and June,” Ms McDougall said.
“While, yes, the rate rises are earlier than the central bank had indicated, I don’t think any of us really wanted to believe that the cash rate would need to stay at such an emergency low level for multiple years.
“That’s because, if it did, it would mean that our economy was in very bad shape indeed, which would be a bad thing for all of us – rather than the opposite.”
Local agents also agree some sectors of the media are sensationalising the interest rate hikes to seek attention.
Ferris Gold director Michael Ferris said that with the calming of the frenzied “fear of missing out” market evident, attention needed to be drawn to the fact interest rates were still at an all-time low.
“With media at the forefront and potentially responsible for change through its delivery of ‘bad news’, we need to realise a hyper-reaction to the markets’ ebbs and flows exacerbates the corrugations and prolongs or speeds up the change,” Mr Ferris said.
“Real estate will always be a solid investment, so don’t believe the hype and follow the flock, the best time to buy is always now!”
Buyers’ advocate Cate Bakos from Cate Bakos Property said that the election jitters and interest rate increase didn’t do much to change Victoria’s rate of capital growth.
“We’ve sustained yet another very static month for both our capital city and regional market with our capital city exhibiting -0.7 per cent price movement and the combined regions exhibiting +0.4 per cent.
“This is a pleasant surprise given the media doom and gloom, and the mere fact that buyers do typically opt to sit on their hands in the lead-up to a federal election.
“The ALP’s lack of tax reform and significant policy change was a stark differential to the early months of 2019 when voter nerves became palpable in the final months leading up to our last election.”
Ms Bakos said it was anticipated Anthony Albanese’s shared equity scheme would not have a dramatic impact on the property market as a whole, however, the headwinds of inflationary pressures and the increased cost of living were still a significant threat to further negative consumer sentiment.
“By far, the most significant change within our property market relates to our rental outlook.
“With onerous rental reforms rolling out and a general supply/demand imbalance in favour of rental providers, we expect that strengthening vacancy rates and increasing rents will be a hallmark of 2022 and beyond.”