Alongside yet another recent rate rise and with predictions of further falling house prices, it’s no wonder you might be considering holding off on any purchases or investments.
If you’re prepared to purchase, now may be an opportune moment to do so – with other buyers holding back, you could have more options, less competition, and more negotiating power against the vendor. If you are considering purchasing a home, or are undecided, read on. We have compiled a list of reasons why now might be a good time to buy.
Decreased competition
In recent years, competition has been fierce and housing supply limited, leaving slim pickings for many potential buyers. But recent rate rises and inflation have made some buyers hesitant. We saw this in auction clearance rates at the beginning of the spring buying season – typically a busy time for sales. However, this year the combined capital city auction clearance rate is sitting at 62%, according to CoreLogic, down from 74% a year ago, and a peak of 80% in March 2021.
A softer market may not only mean less competition on auction day, but more choice and time to comprehensively evaluate properties without jostling with other contenders.
Less competition also means the power balance has shifted to the hands of buyers, which brings us to our next point.
It’s a buyer’s market
According to CoreLogic data, fewer people are buying houses, and properties are taking longer to sell. In the three months to August, median days on market rose from 20 days to 33.
Vendors want sales and are feeling pressured to move their property, so if you’re ready to take take the plunge into the market and open to negotiating, you may be able to get a good deal on a property that’s been on the market for a while.
Property prices are falling
ANZ economists are predicting a 15-20% drop next year, and with property prices dropping 1.6% in August, which is the the largest national monthly decline since the 1980s, it’s proof that the fall is already starting.
But once prices bottom out, you’ll likely face stiff competition from other would-be home owners looking to take advantage of relatively low prices. And as we know in the property world, what goes down must come up, with prices expected to recover in 2024. This means if you’re looking to buy you need to take advantage of the falling prices sooner than later.
You are getting ahead of any further interest rates
Another month and another interest rate hike.
Lenders assess your borrowing capacity at an interest rate that’s 3% higher than the loan you applied for. So, as rates go up, the amount of money you need to borrow becomes more difficult to approved for. In other words: your borrowing capacity falls. So getting ahead of rate rises now may make for a smoother loan approval process and higher borrowing power.
The team at Broad Finance can help! Get in touch.
It’s certainly true that picking the right market can be difficult. However, it can be even harder to find the perfect home–you never know when it will appear on the market. If you come across a house you like that’s within your budget, reach out to us today. We can help with the financing while you focus on house hunting and negotiating!
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