In his weekly remarks, Real Estate Institute of New South Wales (REINSW) CEO Tim McKibbin said that while inflation is a clear concern, deals are still being done in the real estate market.
Mr McKibbin noted that there is a distinction to be made when it comes to consumer spending.
“As the price of non-discretionary goods like petrol and energy rise, people have to pay more for them, but they are not necessarily consuming more,” he said.
“The impacts of successive rate rises are beginning to snowball and the latest hike will compound the pressure.”
While real estate transactions are still being conducted, this has often been done where the vendors understand the reduced capacity of buyers.
Overall, the traditional spring selling season has been influenced by broader uncertainty across the economy.
However, the latest CoreLogic auction results show the preliminary clearance rate in Sydney at 69.7% – the highest since April.
“It will be very interesting to watch the results over the coming weeks to see if this is an anomaly or a new trend,” he added.
“Borrowing limits are reducing. Purchasers in competition set the market for properties and the ability for them to compete for available stock at the moment is compromised.
“This is especially true for first home buyers who have no equity to draw upon.
Mr McKibbin said there are other buyers who view the uncertainty by implementing a wait-and-see approach.
“This uncertainty is especially evident when you consider the discrepancies in perspectives among different economic commentators,” he said.
“People crave comfort, particularly given the sum of money involved in a property transaction is so significant, so a lack of certainty drives inertia.
“The overall effect of the Reserve Bank’s decisions has been to subdue market activity. This was predictable and consistent with previous rate rise cycles.
“However, some impressive recent results at the top end of the market, for instance, demonstrate that certain cohorts are still willing and eager to transact.”