“Australasia’s #1 real estate coach and trainer”, Tom Panos, is “stressed” after having “almost no buyers” at Saturday’s Sydney auctions.
I’m STRESSED 😬 We had almost NO buyers.
Yet I still think vendors should sell now, here’s why…Plus, John McGrath told me that 25 economists across Australia agree on this – the #realestatemarket will get worse before it gets better. https://t.co/fv4Hvrt1K5
— TOM PANOS (@tompanos) July 9, 2022
According to Panos:
“I had six auctions today. Out of the six I sold one out of six… And the only one that did sell was the last one. So I was zero out of five till the auction I did this afternoon at 3.30pm… The first five auctions were quite sad. Pretty much the only people that were there were the agents and the vendors… I pretty much had no one register throughout the day”…
“People have turned around and thought to themselves, this [interest rate rises] is getting really scary out there as a buyer, which I think there is definitely some of that”…
“Here’s the deal. If the Reserve Bank wants evidence… take it from someone that is there at the frontline… it [interest rate hikes] has already had an impact… There have been 20% drops in three months in certain parts. For instance the central coast is one of those”.
“So again, all I’ve got to say to you is: the Reserve Bank please keep your eyes out on real estate. It is having an impact. There is no question about it. It’s concerning buyers, we have vendors who have significantly reduced what they were hoping to get. And in addition to that, there’s a subset of buyers that purchased… at end of 2021, which now have assets that are now significantly worth less than what they paid for”…
“Right now, if you are a vendor…you’ve got to be a very brave person to hold off not putting it on now… I don’t want to see you putting it on in September, October, November… We know that we have our normal seasonal rush of properties that hit the spring market. So, when you couple that with most likely at least another one, maybe two, maybe three, maybe four interest rate rises, this says to me that you want to be a buyer this spring. How do you become a buyer this spring? By being a seller this winter. Sell it now… Get on the phone to your agent Monday morning”…
“25 economists across Australia agree on this one thing – the real estate market will get worse before it gets better”…
The data doesn’t lie. CoreLogic’s daily dwelling values index for Sydney has been in freefall ever since the Reserve Bank commenced its tightening cycle in May:
Over the past quarter, Sydney dwelling values have plunged 3.3%, which is certain to continue as the Reserve Bank’s latest rate rise, let alone future hikes, are transmitted into prices.
The Reserve Bank claims that it doesn’t look at house prices per se when it sets monetary policy. What it is concerned about is how rising mortgage repayments and falling house prices impact consumer spending, which is the economy’s biggest driver.
Therefore, the Reserve Bank probably won’t stop hiking rates until there is actual evidence of consumption spending falling, which could take several months before it begins to manifest. By that time, it will likely have hiked too far.
According, I still expect the Reserve Bank to start cutting rates mid next year as the economy teeters on the edge of recession.
