Interest rates are finally going up. The change was inevitable but all the same, the impact is being felt across Australia after a rise in May and a significant jump in June. This has left many buyers and sellers wondering what their next move should be.
The major impact being seen right now is a levelling off of house prices. However, after record growth over the last few years, this flattening is not actually a major reason for concern.
While it is always your personal circumstances that dictate your decision to buy or sell property, here are some perspectives to take into account in 2022.
For Sellers
If you are looking to sell your home in 2022, it is recommended to take action sooner rather than later.
In terms of the ‘property clock’, many areas are now past or about to reach their peak. This means prices will cool and markets will transition from being in favour of sellers to being preferable for buyers.
Right now, prices are still relatively strong. You can never know when the exact peak hits until it has passed but you still have the opportunity to get a good price before further rate rises take hold.
For Buyers
The most important thing if you’re planning to buy a home this year is to keep interest rates in mind. They will impact how much you can afford to borrow so talk to your broker about getting the most competitive rate.
You may wish to discuss locking in a fixed rate or choosing a split loan so you aren’t hit with increases you can’t handle. Your broker and lender will factor higher rates into the amount you can borrow, which will hopefully give you room to accommodate a higher monthly mortgage in the future.
If you do decide to hold off on purchasing while you wait for prices to ‘fall’, consider that a lower home price may be offset by higher interest. Again, it pays to work with your broker and your agent to figure out what you can afford.
Still on the fence?
If you are unsure whether it’s the right time to sell, keep in mind that you will most likely be a buyer too. Especially if you are upsizing, a flatter market can work in your favour.
While you might not get the price you hoped for your current, smaller home, the fact is, your next home will be selling for less as well. In terms of percentages, if there is a 5% market drop, you’ll be the one who comes out on top.
Confused? At the end of the day, when it’s time to buy or sell, it’s time to buy or sell. What matters is getting the best outcome for the current conditions, whether that includes high interest rates or stabilising property prices.
Talk to your local Professionals property agent for information about current home prices in your area.
