The property market has been a hot topic this year due to rising interest rates, low availability of stock for sale and a shortage of rental properties.
If you’re thinking of buying between now and Christmas, here are some tips and insights to factor into your decision (keeping in mind that every area has its own property profile and you need to make a plan that matches your personal goals).
Conflicting factors are influencing outcomes
There’s no denying that rising interest rates have added to the cost of a home loan in Australia. This is limiting the amount buyers can spend.
However, stock on the market is also limited. With overseas and interstate buyers active in many parts of Australia, there is still demand in popular and growing areas. This means buyers are being encouraged to keep their offers competitive.
During the height of the pandemic, bidding wars took place and prices jumped stratospherically. This year, there is less urgency when it comes to making an offer, but sellers are still generally finding there is enough interest to hold out for a price they are comfortable with.
It’s a great time to invest
Meanwhile, the country is still in the grips of widespread rental property shortages. In early May, reports pointed out that average rental prices across Australia’s capital cities have gone up by 11.7 per cent over the last year, which is a record-breaking jump.
As a buyer, if you’re thinking of ‘rentvesting’ and purchasing a home or unit for someone else to live in, or expanding your portfolio, it’s more than likely you will have no trouble finding a tenant and be able to generate strong yield, especially if you enlist the help of a reliable property manager.
Incoming buyer incentives
As a first home buyer, you may find 2023 gives you the chance you have been waiting for to make a purchase.
The Federal Government’s May Budget announced an expansion to the First Home Buyer Guarantee. This incentive has the government act as guarantor for some first home buyers, reducing the need for a 20 per cent deposit.
The initiative will be expanded to include siblings and friends who are buying their first home together.
If you’re eligible for the guarantee, it may make sense to team up with people who can buy with you. Make sure you have a detailed agreement in writing before you take this step.
Property is a long game
Forecasts and property sale results are very mixed at the moment.
With interest rates and the cost of living continuing to rise, there is talk of a ‘fixed rate cliff’, which will see a rush of people selling around spring this year because their home loan repayments have become unaffordable. If the market does experience a surplus of stock, prices will begin to fall.
As a buyer, the risk is that you make a purchase in a falling market. However, you may also have the opportunity to score a bargain. To add to this, market falls in Australia are historically very short-lived. Once interest rates stabilise, it’s likely prices will begin to rise again.
If you are thinking about buying in 2023, aim to do so with a long game in mind. If you have a clear strategy and can hold onto the property, you should find you make a worthwhile investment. Speak to your accountant, mortgage broker and local Professionals real estate agent to make a plan that suits your
goals.
Ready to make your move in the real estate market? Contact me today at teresa@teresaberger.com.au
