FOMO fuel housing market is downward

FOMO is returning as HomeSeekers hopes to take a lead in the game, with interest rate decisions on Tuesday marking a key turning point in the property market.

Now, economists at all four major banks expect the Reserve Bank of Australia to lower interest rates for the third time this year when the board of directors meets next week, raising the official cash rate from 3.85% to 3.6%.

Buyers will now keep dropping ducks as forecasters expect at least once in August.

Search activity on Realestate.com.au has been cut sharply so far, said Anne Flaherty, senior economist at Rea Group.

“It’s one thing to lower interest rates twice, but when you have three in six months, it will really help to increase confidence,” Ms Flahti said.

“Cutting tax rates helps to improve borrowing capacity, which will incorporate the expenses people pay for their property.”

National house prices are already at record highs, and the latest Western Pacific Consumer Sentiment Survey found that three-quarters of Australians expect property prices to rise in the next 12 months.

“When people strongly expect a home to be worth more, it may drive them to buy it soon,” Ms Flaherty said..

Leading curve

Households’ borrowing capacity has been greatly reduced in 2022 and 2023, when the RBA hiked interest rates 13 times to curb inflation, prompting many potential buyers to sit off the market.

But mortgage choice broker Josh Almond said loan activity is heating up as people start to get “buy preparations.”

“More than six months ago, people remained alert about the performance of the market, if there was a possibility of lowering interest rates,” Almond said.

“I think this year will be a very intense spring. So, continuous ducks are crucial.”

Buyer activity has increased behind the recent drop in interest rates. Image: Getty

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Mr Almond estimates that the recent reduction rate has increased a person’s borrowing capacity by about 10 to 15%.

But in some markets, the increase in purchasing power has been offset by strong price growth.

PropTrack data shows that hundreds of suburbs in Australia have recorded six-figure price increases in Australia over the past six months, with 65 suburbs in Sydney, 41 suburbs in Perth, 24 suburbs in Brisbane and 23 suburbs in Adelaide.

Prices rose by six figures in just eight Melbourne suburbs and five Canberra suburbs.

Real estate agent Damon Warat of Brisbane-based real estate agent Ray White Ascot said concerns about the disappearance or FOMO prompted many buyers to come up with strong auction offers.

“Buyers are very conscious every time they miss a property, and if it takes them three to four months to find similar property, they have the opportunity to pay tens of thousands of dollars for the same property due to capital growth.

“At the table, buyers and sellers know that the market is up. It doesn’t stay the same, it’s not going down, it’s just going up.”

Home values ​​in Ascot, Brisbane have soared over the past six months as supply is limited and interest rate fuel competition is limited. Image: realestate.com.au/sold

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Median home prices in Ascot, Brisbane has soared 11 per cent or more than $300,000 in the past six months, PropTrack data shows.

“Last month, I was personally the second largest month for 23 years since I sold real estate,” Varat said.

Adelaide has remained the most powerful capital over the past year, with local Harris agent Paul Alvino noting that affordable markets are still particularly competitive, despite slowing down in traditionally quieter winter activities.

“In my experience, Adelaide tends to hibernate throughout the winter.”