Boring is Cool.
Before I dive into this week's note I wanted to acknowledge some feedback I have received from readers in recent months…the shocking revelation that this newsletter has become a bit boring. Whilst I won’t attempt to defend this mundanity I will point out that it could be a reflection of the very market I’m commenting on. It’s so much easier to write a fun newsletter roasting agents when a lot is happening but with less activity some of my favourite game show hosts have gone into hibernation/aren’t selling anything
*Side note, you may have noticed recently a lot of agents moving to different offices…this sort of real estate ‘musical chairs’ is just another side effect of not enough listings (or too many agents?)
With school holidays coming to a close and Mosman re-patriating from Noosa, Bali and Mollymook things look set to change…I predict that this market is about to properly re-open for the first time since COVID.
The prime characteristic of the recent market has been a prolonged period of low supply. This has meant that despite the many headwinds, property has outperformed, and if lower interest rates helped to drive prices up it’s intriguing that higher rates haven’t really created the reversal that many expected.
The question is, what happens when the balance of supply changes?
Whilst we are only one agency (out of 77 in Mosman) we do have a significant market share in the house and semi-space, that’s not a boast but it does put us in a position to tell you what the next few months will look like.
External lead indicators we also monitor to cross reference this kind of prediction include the pipeline of stylists and property lawyers…they are getting busy. Put these factors into a pot and it becomes a pretty reliable way to read the tea leaves.
The bears will have you believe that this increase in supply combined with factors like the ‘mortgage cliff’ will cause a crash. Sorry, but I don’t agree. There is a significant backlog of demand that will absorb this new supply.
The bulls will have you believe that we are on the brink of another boom, I could be wrong but given global uncertainty and all other macro factors I find that equally hard to believe.
The RBA are walking a tightrope at the moment and many of us were surprised when they paused last Tuesday…this move/non-move left me wondering why?
My theory (this week) is that the RBA are delicately managing a surprisingly stubborn market that they definitely don’t want to see catch fire. Equally it’s no good for anyone if the market tanks. I suspect that Governor Lowe and the board know that we are entering the time of year where supply will increase and this in itself may act as a quasi-rate rise.
There is no doubt that the RBA has its finger on the trigger but I think their moves from here on in will be reactive to how things play out…the goal is to keep the market stable.
Stability is great news for buyers and sellers as it means you can probably buy before you sell, or sell before you buy, and avoid disaster. These slightly more predictable conditions should mean more sales akin to pre-COVID levels…unless of course there is another global pandemic.
Maybe then I will be able to return to my weekly roasts…
Until next week,
David