I think you'll find that as a buyer, you want there to be high inventory, not low inventory. Inventory being the supply of housing stock for sale at any point in time, the more there is, the better position a buyer will find themselves in. More choice of properties, more negotiating power.
Conversely, lower stock levels means fewer options at your price point with more people going after the same property. If desperate to buy when there's low stock, a buyer might have to offer (way) more than a reasonable price. This has been happening throughout 2021, when there were low stock levels. But stock levels in the last couple of months of the year have picked up, which interestingly, has seen price rises slow down a lot.
But you really wanna see what happens to stock levels in times of higher interest rates, that is, when borrowers are faced with higher repayments and are ultimately forced to sell. Those who lived through the 1990/91 recession have lived to tell the tale. Back then rates rose to 17-18% from about 6-7% a few years earlier. But the average mortgage was much, much lower than it is today.
A couple of years back, I read somewhere that people are so indebted today that just 3 rate rises of 0.25% this time around are the equivalent of 11 to 12 rate rises back in the early 90s. I'd say with the further rate cuts applied since then sending loan balances higher again, that would now be 2 rate rises being the equivalent of 11 in the early 90s... I'd also say it won't be too long before a lot of borrowers are going to get their ar#es fed to them on a plate.
