News & Advice.
Why Now is a Good Time To Buy.
There’s no doubt a good proportion of potential buyers are hesitant to jump into the market. This is understandable, given the 10 rate rises handed down in as many meetings by the Reserve Bank to March this year. The repeated hikes created quite the ride for most mortgage holders as the cash rate climbed from an historic 0.10 % low at the start of 2022 to its current 3.6 %. Now a lot of would-be purchasers are in holding patterns fuelled by nervousness about the future.
Yet they should be looking at doing the opposite – as to Maker Advisory’s team of buyer’s agents it is clear that current buying conditions are the best they have been for months if not years. “Over the last four to five weeks several factors have come into play and created a far more positive scenario than one simply overshadowed by the spectre of interest rate rises,” said Maker Advisory senior buyer’s agent Campbell Lemmon. “If you can afford to do so I would be buying into the market now.”
Before we explain why, it’s important to remember such windows do not last for long. At times like the current when talk of economic headwinds dominate news bulletins it’s easy to forget that property prices are cyclical and that it is only a matter of time before they head north once more.
“The trouble is that a lot of people are waiting for the bottom of the market,” Mr Lemmon said. “But these people have to realise no-one is going to stand in their front yard and wave a sign to let them when it actually happens. Then before they realise, we’ve gone through the bottom of the market and we’re on the way back up. In markets like the one we’re dealing with now we often see people kicking themselves for missing that period of time when prices were at their lowest.”
But what about interest rates we hear you ask? The answer is always to look to long-term gain. “Even if you end up paying a couple of percentage points extra on your mortgage you certainly won’t be thinking about that in 10 years from now,” Mr Lemmon said. “It’s when you try to flip property that you have to be careful. But if you’re in for a long-term seven to 10 year-hold or more, then a couple of percentage points especially when we’re at the bottom of a cycle as we are now will be negligible in light of the capital gain you will make.”
1. The market is at a low or lowest point
Dwelling values in Australia are -7.9% lower over the past 12 months, the largest annual decline on record, according to the latest monthly data from leading analysts CoreLogic. But the first signs that this is coming to an end have appeared: the same report also reveals the decline is slowing, and fast – the monthly pace of the value slide slowing quickly over February to just -0.1%. It indicates to us that the market is just millimetres from the bottom if it isn’t there already. “We are definitely at the low point of the market and there is very little stock,” Mr Lemmon said. “If we see more buyers come into the market we will see quite a stabilisation in prices and even a little uptick based on supply and demand. What’s more, in recent weeks each of Maker Advisory’s buyer’s agents has noticed price rises in certain pockets. “There are markets within markets, and some are performing better than others particularly in parts of the Central Coast and on Sydney’s Northern Beaches,” Mr Lemmon said.
2. Confidence is rising
“As buyer’s agents we’re out in the market daily and attending auctions every week and there are definitely more buyers around this week than there were four or five weeks ago,” Mr Lemmon said. “It’s been noticeable too that their confidence is rising as the current talk coming out of the Reserve Bank and the media is that we are very close to the top of those interest rate rises. We’re witnessing a new optimism in the market. People are clearly buoyed by the thought rate hikes may be coming to an end sooner rather than later.”
3. Sellers are accepting more realistic prices
One of the strongest indicators of a buyer’s market is when properties become harder to sell and sit on the market longer, effectively forcing vendors to accept a lower or more realistic price than in the past. This could not be truer than right now. CoreLogic reports properties are affected nationally, and that in the three months to February, median days on market hit 41 – double the previous low of 20 days recorded in the three months to November 2021. “Vendors are coming to terms with the current market conditions and therefore prepared to meet the market on price,” Mr Lemmon said. “Anyone going out to buy a property now will find it’s going to be easier to pay on the lower side for what they want. This is definitely happening - we have seen examples where properties have sat on the market for months and then go very quickly when the vendor adjusts their price.” But just as the decline in property values has just started to slow, so has the propensity for vendors to discount, something they have been doing consistently from the start of 2022. CoreLogic reports the national median vendor discounting rate in the three months to February contracted slightly on the three months to January. “It’s yet another sign that the tide is just starting to change,” Mr Lemmon said.
4. Stock levels are low for this time of the year
“Traditionally the lead up to Easter is quite busy,” Mr Lemmon said. However, while new listings have seen a seasonal lift, they are still -12.7% lower than the previous five-year average, CoreLogic reports. This indicates that a lot of sellers are waiting in the wings, unwilling to commit to a formal selling campaign, yet still have a property to sell ‘off-market’. “Buyer’s agents specialise in sourcing these off-market properties,” Mr Lemmon said. “We are the experts in finding our clients not only their ideal property but often before it gets to market.”
5. Rents are at record highs
Investors looking to snap up property will reap the benefits of the highest recorded annual growth rate in rents – 10.2% in the 12 months to December. This growth is holding steady, too, according to Core Logic. The most rapid annual rise has been evident in unit rents across Sydney, Melbourne and Brisbane where rents have increased around 14% to 17% annually.
The Maker Difference.
Thinking of buying your next home or investment property and not sure what to do next? Talk to Maker Advisory about how we can help you find exactly what you want and for the best possible price.
To find out more, view Our Services.
Interested in finding out more? Send us a message and we will be in touch.