Interest Rates Australia | Property Market Update | March 2023
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In this market update, Paul Pappas from Mortgage Choice discusses the latest interest rates and the property market in Sydney in March 2023. Interest rates have been increasing since May 2022, and property values are starting to flatten after a necessary correction. Rents have also been increasing sharply, and renters are facing the brunt of it. Banks are still keen to write business and are offering incentives of up to $5,000 for people to refinance and move banks.
As for interest rates, variable rates for owner-occupied borrowers are currently at 4.84% p.a, but they are expected to increase by a quarter of a percent due to the Reserve Bank increase. Fixed rates are less attractive, and a lot of banks are starting to increase their fixed rates, which are getting close to 6% p.a. Paul recommends that people ride out the variable rate until more attractive fixed rates become available, subject to there individual circumstances.
In terms of the property market, property values decreased by 0.6% in the last quarter, indicating a flattening out of the market. Buyers are cautious due to higher interest rates and a 30% reduction in borrowing potential from twelve months ago. This has caused a correction in the property market, and vendors are holding off on selling. However, with tight stock levels and a reasonable level of demand, there has been a good increase in auction clearance rates, which currently stand at around 70%.
The biggest issue for renters has been the increase in rents. In the last six months, rents have gone through the roof. The property market has flattened out, and a new level of property values has been established. The correction was necessary after a strong increase in values, and buyers are now facing reduced loan ability. However, with the market stabilizing, vendors holding off on selling, and the increase in auction clearance rates, there is still hope for buyers.