Time to read : 2 Minutes
Why there really are no property rules?
It feels like the property market should have finally come full circle and that buyers would have finally had a chance to get in – but things haven't quite happened like that.
Let's quickly summarise:
📈 Interest rates have increased six times in a row so an average owner of a $600K property is now paying $919 extra month.
⬇️ Borrowing power has dropped because lenders are adding +3 buffer to the current lowest rate of 4.14% and so potential buyers now can afford less.
😦 The market has not dropped as much as expected, only coming down by 6.5% on average nationally not the 20% that the RBA has predicted – although we aren't at the end of 2024 yet.
What does this mean for owners
Although there aren't as many properties on the market and the prices have fallen slightly, there are still opportunities for sellers to get fair prices.
Even though you won't get the a peak price from 2021, you will get a market price – meaning that any loss you make when you sell, you'll get the same discount buying in.
There are 25.2% less properties for sale right now than this time last year, so buyers will have less to choose from – which could make your home a hot commodity.
The Australian Bureau of Statistics said that 40% of us moved home in the last five years alone, so people are always going to buying homes, even in a downturn.
Beware: that your borrowing power would have dropped too, so do your sums and consult your broker or bank.
What does this mean for buyers
No, the market hasn't really dropped that much. And, yes, you are going to be able to borrow less but this doesn't mean you can't still buy.
Getting a smaller loan isn't necessarily a bad thing, because you are likely buying something you can afford and taking on less debt.
There will be some sellers who have to sell because they can no longer make their repayments. These sales are often advertised as 'distressed' or 'urgent' – in these cases there could be a deal to be had.
For investors who are looking to buy, the tight rental market means that you could potentially be making a very good return on your next property too.
Beware: Crunch your numbers, the RBA have made it clear they are not done yet with the interest rate hikes.
The bottom line hurts
No one is winning right now but you also won't lose – unless you bought at the peak.
But the same steps apply now as before COVID, Russia/Ukraine War, endless rate rises and annoying high inflation.
Read more:
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