The inner west real estate market is set to be boosted by a “perfect storm” of market forces that is tipped to lift buyer demand and put a floor underneath falling prices.
Housing experts across the region pointed to three major changes poised to alter the direction of the market, which had been expected to only bottom out by mid-2020.
They included the Coalition’s unexpected win in the federal election last week, which has given renewed confidence to buyers and sellers anxious about Labor’s plans to cut negative gearing.
The Reserve Bank of Australia has also signalled an imminent cut to the cash rate, possibly in early June.
Such a cut would coincide with a push from financial regulators to end the current squeeze on credit.
The Australian Prudential Regulation Authority, the banking regulator, announced this week it would review a mix of stringent lending guidelines put in place when the market was booming.
Lifting these policies would allow owner occupier buyers to borrow about 9 per cent more and give more house hunters access to a loan.
Agent Steven Devine of Devine Real Estate said that he had already sensed an increased feeling of positivity through conversations with buyers and vendors.
“There is no wonder there is a lot more renewed hope,” he said.
“People are feeling as though they can get on with it and get business done with a bit more stability.”
Despite this, Mr Devine stressed that it was too early to tell of any real impact on the market as a whole.
McGrath Newtown agent Adrian Tsavalas said there were many concerns about the changes that had been proposed, and the election result seemed to be popular among clients.
“We have seen an almost immediate spike in inquiries and increased buyer confidence on the back of an unchanged government,” he said.
“Coupled with possible rate cuts and easing lending laws, it seems that we may have already seen the bottom of the market.”
The new or current market is expected to provide a level playing field for both buyers and sellers, Mr Tsavalas added.
“Buyers will be able to compete for a property and pay fair market value while vendors will know what to expect when they come to market without being caught out by any large downward shifts during their campaign,” he said.
CoreLogic head of research Tim Lawless said any one of these three developments on their own would be welcome news for buyers and sellers but together they would have a “material impact” on sales.
The property research group had earlier forecast a bottoming out in Sydney prices by the middle of next year, but that recovery was likely to occur sooner due to recent developments, Mr Lawless said.
“The market has become fundamentally different in just a week,” he said.
“The shadow of Labor’s negative gearing policies was hanging above sales for much of the year but a lot of confidence has returned to the market now that it’s gone. And markets survive on confidence.”
Preliminary figures suggested prices were continuing to fall at a slower pace than last year, Mr Lawless added.
“The downturn has been losing momentum since January and we’ve seen that continue this month,” he said.
Starr Partners chief executive Douglas Driscoll said the recent changes were “like all the stars aligning at once”.
“If this doesn’t trigger renewed demand from buyers I don’t know what will,” Mr Driscoll said.
“Buyers, particularly first home buyers, will be feeling like they have more wind in their sails … it will be a very different market by the end of the year.”
— With additional reporting from Aidan Devine