What the RBA Rate Rise Means for Eastern Suburbs Property Owners

The Reserve Bank lifted the cash rate to 4.60% on 29 September, the fourth rise this year and the highest level since 2011. This has caused borrowing capacity to tighten further, with potential buyers asking whether to act or wait.

Here is what we saw in the September quarter.

Buyers are still here

Close to 14,000 buyer enquiries.

More than 3,600 people attended our open homes.

79 properties sold.

Homes are taking longer to sell, and buyers are doing more homework before they commit, but the interest is still there.

The opportunity is in trading up

“In a market like this, the gap between a good home and a better one often narrows. Your home may sell for less than it would have a year ago, but the changeover can cost you less too.” Elliott Placks, Principal & Managing Director

Will rates keep rising?

Not necessarily. Ray White Chief Economist Nerida Conisbee notes that this increase doesn’t make further rises inevitable, and that whether 4.60% is the peak depends on the next inflation and employment figures. Inflation eased to 3.5% in July, but underlying pressures have barely shifted, while unemployment rose to 4.6% in August.

Leasing is a real alternative

Our portfolio is running at a vacancy rate of 1%, and average rents rose again this quarter. This quarter, our sales team referred 24 owners to our property management team, and they leased instead of selling.

On the lending side

On a $1 million loan, repayments have risen by about $160 a month. A buyer earning $120,000 has lost roughly $20,000 in borrowing capacity.

“There are still competitive rates out there if you shop around, and lenders are actively looking for ways to lend.” Samuel Landis, Senior Mortgage Broker, Loan Market Double Bay

Figures are estimates and depend on your loan term, rate and circumstances. If you are buying, refinancing or just want to check where the change leaves your borrowing capacity, speak to our in-house brokers at Loan Market Double Bay.

The difference in how we run a campaign

When buyers take their time, how a home is presented, priced, and taken to market carries more weight. 5 of the homes we sold this quarter, worth $47.28 million together, had previously been on the market with another agency.

Questions we are hearing

Should I wait for the market to improve?

If you are buying again in the same market, waiting may not help, because the home you want is moving in the same direction as yours.

Are buyers still active?

Yes. Close to 14,000 enquiries through our office alone last quarter.

People are still moving. We are here for every part of it.