..............High stock levels or is it, low levels of greater fools with access to funding?
A bit of both. More supply than demand for now. That's for sure. There are also still unrealistic expectations out there from some vendors. Those that want things sold are still getting reasonable prices by late last year's standards, just not the stupid prices of Feb/Mar/Apri earlier this year. The market had to come back to some sort of equilibrium as it had over-shot by ridiculous amounts.
Broad softening of around 5-10 % in the circa million category is on the cards if it hasn't aleady happened. These are mostly PPOR's I would imagine.
There will be very few investors in that market to tolerate sub 2-3 % yields with the hope of growth.
Will growth resume once more? Yep.
When? Anyone's guess. I've mentioned in other posts that I consider we are entering a period of very flat conditions, albeit in Melbourne the market I follow and am more familiar with.
My feeling is that the markets yet to fall and feel the pain of contraction are the median and sub-median FHB areas and assets. A couple of more rate rises, which in the scheme of things should not stress those who have allowed contingency. Unfortunately it is this demographic precisely, being most sensitive, to interest rates, that have somewhat naively entered relying on handouts and with nominal savings and not doing their homework or buffering with offsets or some reserves of cash.
The well located properties by way of amentities and infrastrucutre (by default of my definition excluding the outer fringes) are likely to be mopped up by investors. This will be circa 30 km rim from CBD and be infill areas where the franchise commodity is still the dirt (the cow) and yields (milk) should be reasonable as their tenant pool will likely be those who have sold (or forced sales by lenders) and still wish to reside there for the amenity and schools, etc. Also median priced rents should ensure a steady stream of customers.
Melbourne overshot; it's that simple. I don't consider things will collapse, however stagnation (perhaps tracking inflation or thereabouts) will be on the cards for this city for the next five or so years.
I reckon the real litmus test will be this spring. If stock on market rises sharply and demand due to buyer sentiment is still low, then some softening has to occur.
Things will sort themselves out. A homeostasis of sorts will re-balance the market here with supply/demand issues and of course the biggest unknown is how much tighter might credit get with continuing factors overseas.
For those looking to exit this market, now may be a better time than in 12 months time. There may be better opportunities in markets that have yet to really fire. Cash will speak volumes to those vendors desparate to offload in the coming couple of years. Being a liquid buyer in such conditions with folding stuff or offsets will enable one to solve these peoples problems with a reward of discounts deeper than the norm
This not advice to anyone, just my take on things in this city right now and what I'm smelling in the air.