What can we expect in Neutral Bay?
What will happen to house prices after the election?
Australia will head to the polls in just a couple of days. The results do have the potential to influence property values around the country, with Neutral Bay being no exception.
Obviously we can’t predict the winner but we can expect some changes to the housing market once the results are in. Generally with an election, a lot of decision-makers, both at household and federal level, wait to see what will happen before swinging into action.
Some of the factors on the radar for post-election include the following:
Higher interest rates
The property and lending industries have been holding their breath about interest rates for months. Rates have been at record lows but they can’t stay down forever and the Reserve Bank has just started raising rates again.
The impact of a rate rise will be that people have reduced borrowing power. Over the past few years, with rates being so low and demand high, prices have been pushed dramatically upwards. In Neutral Bay for one, the average house price increased from $2.3 million to $3 million between the start of 2020 and May 2022 (an incredible jump of 30%).
A lot of people are asking, ‘Will the housing market crash in 2022?’. While a change in interest rates is unlikely to see prices going into freefall, they are likely to become a bit more stagnant. But because Neutral Bay and surrounding suburbs are so popular, close to the CBD, we don’t foresee the impact being as dramatic as it will be in other areas.
A higher cost of living
You will have noticed fuel prices increasing over the last few months. Add this to inflated grocery prices, higher material costs in the building industry and the surging cost of labour and almost everyone is feeling the pinch in some way.
The way the elected government responds to rising living costs will have a flow on to the property market. The current government proposed changes in the latest budget, which may make purchasing a home easier for some people (e.g. the ability to add your property deposit savings to your superannuation to save on tax), but it remains to be seen what action will be taken to flatten the curve of rising living costs after the election.
As reported by the ABC, those who rely on wages are struggling with prices going up across the board. The result of this is less money to spend on home loans.
Reduced housing availability
The costs of materials and labour are high right now, but both sides of politics are under pressure to ease Australia’s housing stress by authorising the construction of more affordable homes.
The good news about Neutral Bay is that availability is almost always tight because it is already a well-developed area. However, if you’re thinking of selling, it’s a good idea to get in as early as you can, while stock is still extremely limited.
Selling incentives
Another initiative recently announced was that vendors aged 65 and above can put $300,000 of a property sale’s proceeds into their superannuation. This was put in place to encourage seniors to downsize. The incentive may result in more larger homes coming onto the market.
Action stations
As mentioned, people tend to wait until after an election to make decisions.
If you have been thinking of selling, we do foresee the market tilting more in favour of buyers towards the end of the year. However, this means we recommend you take action sooner rather than later. By listing your property ahead of an interest rate rise or even further increases to the cost of living, you stand to catch the buyers who still have higher levels of pre-approval.
The thing about the property cycle is that you never know when it has peaked until you have passed the apex. Right now, all signs point to a slowdown in the near future, regardless of which party takes control after the weekend. If you’re thinking of selling, it pays to have a local expert on your side, so feel free to give us a call.
Want to sell in 2022? Don’t stress about falling house prices… talk to HPA today.
