It’s not all doom and gloom in property

By Jarrod McAleese

For many Australians, the feeling is that we are entering uncertain financial times.

This notion is illustrated by the latest Westpac-Melbourne Institute Index of Consumer Sentiment – which reported a 4.5% drop in June, to 86.4.

Figures of less than 100 indicate pessimism among consumers, while a score of more than 100 is representative optimism.

Westpac’s Chief Economist Bill Evans described current levels as being comparable with the worst of COVID-19, the global financial crisis, the deep recession of the early nineties, the slowdown in the mid-eighties and the recession of the early eighties.

Unsurprisingly, the main factor driving the dip in confidence was inflation. In the latest survey round, 60% of respondents talked about inflation, compared to an average of 12% normally.

And with the Reserve Bank increasing interest rates by 50 basis points, taking the cash rate target to 0.85 per cent, the unease has only intensified.

Prospective homebuyers and mortgagees have been following the latest developments with bated breath. But is there a silver lining amongst the clouds?

Opportunity awaits

Rich Harvey, Buyer’s Agent and CEO, Propertybuyer.com believes the outlook isn’t all negative.

“It’s not all doom and gloom, though that is the perception currently. For homeowners, gains made in property values over the past two years have been extraordinary with a 20 to 30% uptick across most major capital cities. Even if national home values were to retract by 10 per cent (something that’s rarely, if ever, happened), homeowners are still way ahead.

“Their equity is hundreds of thousands more than it was just two years ago – and this will be the safety net when making financial decisions in 2022 and beyond.

“For people looking to enter the market, depending on your position, you can actually view today’s market as a window of opportunity. If you can buy while others are panicking, that’s a big positive. The majority of people will sit back and watch – but the smart buyers are still looking.”

Though not traditionally thought of as a property “high season”, Harvey explains that there are benefits to playing in the market through winter.

“Winter can be a good time to sell your property due to the lack of listings – whereas in Spring, there’s lots of buyers and sellers – and more choice for consumers.

“Ultimately, my advice is to buy when you’re ready to do so. Whether the market is up, down or sideways, there is always value on hand.

“Given the current circumstances, investors will receive great returns as the rental market is extremely strong – it’s a good time to ride the yield curve on the way up.”

Advice for young buyers

Buying your first home can be a daunting experience – but Harvey has some words of wisdom for young consumers.

“You can’t pick exactly when the market will bottom out, so make your move and as long you’re in it for the long term, you’ll be ok. If you want to buy in a certain suburb but can’t afford it, rent there but buy an investment property somewhere within your price range – it’s all about being in the market.”

And while RBA Governor has flagged further rate rises in 2022, there is light at the end of the tunnel for today and tomorrow’s homebuyers.