Some mortgage brokers fear rising interest rates and lingering concerns about the economic outlook are scaring off potential home buyers.
Mason Management Financial Services’ Greg Mason said home buyers are still worried about Australia’s purported economic instability.
“While all the signs suggest the economy is improving, buyers are still treading cautiously and are hesitant to make any lifelong decisions like purchasing a new house,” Mr Mason told Real Estate Business.
“Ultimately if people want to buy a house, they will do so regardless of interest rates or property prices, but I do think rising rates are putting some first home buyers off purchasing a home.”
Interest rates have risen six times in the past eight months. Similarly, property prices are steadily climbing, with Sydney reporting a 17 per cent increase in property prices in the 12 months to April.
A drop in auction clearance rates over the weekend further highlights the case that home buyers are hesitant to buy property.
Australian Property Monitors figures show auction clearance rates dropped to 64.9 per cent in Sydney, down from 66.9 per cent the weekend before.
The slowdown follows a buoyant start to the real-estate year with clearance rates averaging about 80 per cent in the first three months.
However, the news isn’t all bad.
Garry Compton from Home Loan Advisory Service said rising interest rates had little impact on his bottom line.
Mr Compton said while the market may have impacted some segments, it had little impact on investors who are currently looking to capitalise on the property boom.
“Interest rates are still not back at their 10 year average. As such, money is relatively cheap for investors,” Mr Compton told Real Estate Business.