Loan pre-approvals by banks can be confusing. They aren't a rubber stamp to buy whatever you want, but some buyers are being a little too cautious.
Will international turmoil impact Australian property?
Do you enjoy white knuckle rides? I hope so, because in recent weeks we’ve all been subjected to the high-stakes brinkmanship of the US and EU debt crisis and the accompanying gyrations in Australian and international stock markets, and it has not been for the faint-hearted.
Despite the Australian economy’s relatively low exposure to problems in the US and Europe, our stock market has not been spared.
Not surprisingly, some commentators have made the usual claims that this financial turmoil will inevitably cruel the prospects of residential property.
In the short term, it is likely that many participants in the property market will be ‘spooked’ by events. There will be a great deal of cautiousness out there and the default reaction will be to sit on hands and do little. Saying that, in the couple of weeks since the start of the latest bout of volatility, auction clearance rates have remained steady at between 56 and 60 per cent in Melbourne and Sydney. Nevertheless, some vendors will find it tough, especially those unwilling to meet the market with a compelling sales price.
In the medium to long term, I expect the property market to be a beneficiary of stock market volatility. In time, people will look for safe havens and there will be a flight to secure assets. For some this will be cash; but others will choose property. It’s a tangible and familiar asset.
For evidence of this, one only has to look at what happened in the GFC in 2008, when the property market across our capital cities performed well off the back of an easing in fiscal and monetary policy. Let me know what you think by tweeting @WakelinProperty.