National dwelling values were down for the 11th consecutive month in August and this result may leave many people wondering what the traditionally busy spring market will hold.

In the current market, downsizers, first home buyers and investors are seeing pockets of value across the market. However, tight credit conditions are making it tough for many to borrow.

Interest in real estate never seems to abate. The media is always able to find a good headline, whether it’s covering a boom or a falling market.

There is no doubt that a change in the market is happening but does this mean disaster for everyone?

Not so long ago, various state governments were very vocal on how they were focused on affordability issues. With prices falling in many markets, there seems to be less of this type of chatter at present.  This suggests to me that governments may be thinking about reining in some of the current first home buyer incentives.

Opportunities for first home buyers and downsizers are now in abundance however, first home buyers may face a new challenge in the form of the banks.

Interest rate hikes, which I believe the banks have started delivering now to avoid being seen as unfriendly around Christmas time, and the Royal Commission into banking, have had a very noticeable impact in the market. 

The biggest impact has come from the Royal Commission. The number of loans rejected has spiked significantly, leaving many first home buyers out of pocket and unable to secure a loan.

Many homeowners and investors are being encouraged to refinance their loans if their bank is independently raising rates but a recent survey from Digital Finance Analytics showed that this may be a lot harder than many people think. The survey suggested that around 40% of people who tried to refinance a property loan recently were unable to do so. 

In my view, tight lending conditions will negatively impact property values moving forward. If government intervention does not occur to rectify the imbalance, property values will be impacted even more in the future and negative equity, particularly for buyers who purchased within the last 24 months, may become a major issue.

If we see a situation where interest rates are rising and property values are declining, I fear that thousands of property owners will become financially stressed, which is not good news for the market.

It’s fantastic that many affordable buying opportunities are presenting in the current market but it’s also important that people can attain finance to take advantage of them.