The lag effect is the potential ineffectiveness of fiscal policy due to the time it takes to recognise an issue, implement the appropriate approach, and affect the economy.
The March 2022 qtr inflation data highlighted a 5.1% figure that shocked many and led to the Reserve Bank of Australia raising rates in May by 0.25% and again today (June 7) by 0.50% – the cash rate is currently 0.85% https://www.abs.gov.au/statistics/economy/price-indexes-and-inflation/consumer-price-index-australia/latest-release
As a buyer’s agent, I felt a shift in buyer confidence in the residential property market in December 2021. Properties that would typically sell with multiple bidders in the affluent suburbs of Albert Park & Middle Park started passing in at auction! Many people put this down to buyer fatigue and distractions with interstate and overseas borders opening and the festive season celebrations.
When I examine our website lead enquiries and compare Jan – June 2021 to 2022, you can see a stark difference (below) – To qualify as a lead, the visitor to the website must complete the Name – Number & Email section.
Website Lead Enquiries, Jan – June 2021 – Total 201
Website Lead Enquiries, Jan – June 2022 – Total 78
The numbers above are a reflection of buyer demand for outsourcing and working with a professional buyers advocate or buyers agent. We are in a fortunate position that after 12 years in the industry & seven years in the business of helping people, the majority of our clients are via word of mouth and referral.
Today’s official cash rate rise of 0.50% isn’t great news for the housing market. It will dent confidence, reduce borrowing capacity and make a majority of buyers fearful, they will either delay their decision to buy or not buy at all.
On the contrary, savvy, seasoned investors who understand property cycles will often add to their portfolios in times of uncertainty like we are about to go through.
Owner Occupiers looking to upsize the family home will also have opportunities in this market. The price band they couldn’t afford 6-12 months ago is gradually coming down in value and looking more affordable.
Suppose you blocked out the noise and purchased a quality asset in the months leading up to the election in 2019 when the fear was high if you still own that property. You would be sitting on substantial equity. If you were smart and withdrew the equity late last year or earlier this year, you will hopefully be able to capitalise on this period of fear in the market and add to your portfolio.
My advice for buyers, block out all the noise and focus on what’s important to you. Build a team of trusted professionals around you, who can provide independent real-time advice based on your family’s needs.
If you want to be ahead of the lagging data, speak with one of our Property Buyer Agents on +61 8374 7652 or book a Zoom call here
Industry Insider Property
Level 3, 489 Toorak Road, Toorak 3142
+61 8374 7652
+61 402 346 810