Over the month of November house sales dropped considerably in Australian capital cities, which seems to be a continuation of the downward trend in house sales that we saw Aug thru Oct last year.
In Sydney, house prices that had already decreased by 1% in the months previously, decreased further to -1.4% in the month of November. Similarly, in Melbourne, house prices that had decreased by 0.5% previously, now saw a moderate downturn to an unexpected low of -3.5% in November.
We also saw an increase in interest rates by the major banks, which resulted in less money being loaned to home buyers during November, which was partly due to the new APRA regulation which have significantly slowed growth in home buying industry to avoid riskier home lending, and which has also caused an influx of mortgage defaults, which is most concerning.
With the average household expenditure on a mortgage in Sydney now averaging over 39%, and in Melbourne averaging over 32%, it is understandable that home buyers are becoming more wary of buying a home.
And with more people selling homes than buying them of late, it is easy to consider home buyers are becoming “spoiled for choice” in the current market. Some years back a quaint little inner city home that once might have been described as “cosy” is now considered simply “small” by home buyers. Similarly, “family homes” in the suburbs that were once considered to be out in the boondocks, are now described as “mansions” well worth the “easy travel distance” of 30-45mins by public transport. Because they cost no more than the cosy houses or units of the inner city, it is easy to see why home buyers are leaning more towards the space and liveability of the suburban family home, less perturbed by the travel aspect of buying in the outer suburbs.
As a result, inner city and metro properties are becoming less favoured by home buyers who now desire liveability for their investment over the convenience of inner city living.