Is It Worth Buying Property Now?

For a little while now the media headlines have warned of rising interest rates and volatile economic conditions.

Which poses the question, should you wait until next year to buy property?

Personally, I have a lot of clients eager to buy property during this time of “uncertainty” and some of the reasoning behind this belief is as follows:

 By waiting, they might lose the loan they previously qualified for:

• Recent analysis suggests that a 1 percent rise in interest rates could decrease borrowing capacity by as much as 10 percent.
• The amount they’re pre-approved for is irrelevant, it’s the amount they qualify for once they’ve actually purchased which dictates how much they will be able to borrow.
• Consider how much a loan reduction may have on their budget.

There is very little competition at the moment:

• From what I see in the market currently the buyer enquiries are down considerably since the housing boom of 2021.
• How often is it that buyers face little competition when it comes to well located real-estate?
• It only takes a couple of interested buyers to engage in a bidding war and lead to the property being sold for higher then the vendor anticipated.
• What happens when all the buyers come back?

Buying has become more favourable in some areas:

• Building materials have seen a dramatic rise in price due to the supply chain issues currently effecting Australia. I personally believe that this will lead to a decrease in the Construction Industry, and as a result a further limited supply of real estate.
• Rental prices are rising at the fastest rate in over 30 years. This means yields for investors are rising and for the home buyers who choose to wait and sit out of the market will end up paying higher amounts of rent in the mean time.

The Property Market in most areas has already seen a decrease in median house prices of around 7-10 percent compared to late 2021 due to economic conditions.

There is a lot of positive statistics that the media tends to forget to mention in there apocalyptic financial review segments. Wages are rising in Australia, on top of that the nations unemployment rate has slipped to under 4% for the first time since the 1970s.

During the pandemic, households in Australia accumulated a total of 240 billion dollars in savings and the average household is 2 years ahead in mortgage repayments.

Published by Jakob Keane – Buyers Agent